Endogenous cartel formation: Experimental evidence

Miguel A. Fonseca, Exeter and Hans-Theo Normann, DICE examine Endogenous cartel formation: Experimental evidence.

ABSTRACT:  In a Bertrand-oligopoly experiment, firms choose whether or not to engage in cartel-like communication and, if so, they may get fined by a cartel authority. We find that four-firm industries form cartels more often than duopolies because they gain less from a hysteresis effect after cartel disruption.