Collusion without communication

Tacit cartels did not arise in experimental triopoly markets even with the help of detailed instructions to prospective cartel members on how to coordinate actions. In duopoly markets tacit cartels were successful, with winning bids and supporting "pass" bids increasing gradually. A simulated third bidder, entering with known probability, prevented the buildup of cartel prices in duopoly markets. We suggest that tacit cartels can operate when members are able to build trust in and support for each other. In markets with more than two sellers the inability to communicate appears to prevent the creation of mutual trust.

• Type: Journal
• Year: 2006
• Where: IEPOL
• Authors: Astri Muren, Roger Pyddoke
• Keywords: Cartels, IEPOL 2006, Markets, Tacit Cartels