Collusion Among Many Firms: The Disciplinary Power of Targeted Punishment

Catherine Roux and Christian Thöni

Cahiers de Recherches Economiques du Département d'économie from Université de Lausanne, Faculté des HEC, Département d’économie

Abstract: We explore targeted punishment as an explanation for collusion among many firms. In a series of Cournot oligopoly experiments with various numbers of firms, we compare production decisions with and without the possibility to target punishment at specific market participants. We find strong evidence that targeted punishment enables firms to establish and maintain collusion. More so, we find that the collusive effect of targeted punishment is even stronger in markets with more competitors, suggesting a reversal of the conventional wisdom that collusion is easier the fewer the firms.

Keywords: Cournot oligopoly; Experiments; Collusion; Targeted punishment (search for similar items in EconPapers)
JEL-codes: C91 K21 L13 (search for similar items in EconPapers)
Pages: 20 pages + appendix (total 25 pages)
Date: 2013-02
New Economics Papers: this item is included in nep-bec, nep-cdm, nep-com, nep-exp and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Collusion among many firms: The disciplinary power of targeted punishment (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:lau:crdeep:13.02

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