Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2024-12-20
Number: 24-078/VII
Author-Name: Jeroen Hinloopen
Author-Workplace-Name: Netherlands Bureau for Economic Policy Analysis and Tinbergen Institute
Author-Name: Stephen Martin
Author-Workplace-Name: Purdue University
Author-Name: Sander Onderstal
Author-Workplace-Name: University of Amsterdam and Tinbergen Institute
Author-Name: Leonard Treuren
Author-Workplace-Name: KU Leuven
Title: Spillovers from legal cooperation to non-competitive prices
Abstract: Antitrust laws prohibit private firms to coordinate their market behavior, yet many types of interfirm cooperation are legal. Using laboratory experiments, we study spillovers from legal cooperation in one market to non-competitive prices in a different market. Our theoretical framework predicts that such cooperation spillovers are most likely to occur for intermediate levels of competition. Our experimental findings support this theoretical prediction. In addition, our experimental results show that repeated interaction and communication about prices in a market are not necessary to achieve non-competitive prices in that market, as long as subjects can form binding agreements in a different market. Results from additional treatments suggest that commitment and multimarket contact are necessary for cooperation spillovers to emerge.
Classification-JEL: 
Keywords: Cartel; Communication; Cooperation spillovers; Antitrust; Experiment
File-URL: https://papers.tinbergen.nl/24078.pdf
File-Format: application/pdf
File-Size: 1.571.330 bytes
Handle: RePEc:tin:wpaper:20240078