Institutional authority and collusion

Axel Sonntag; Daniel John Zizzo

doi:10.1002/soej.12065

Institutional authority and collusion

Axel Sonntag, Daniel John Zizzo

School of Economics

Research output: Contribution to journal › Article › peer-review

7 Citations (Scopus)

11 Downloads (Pure)

Abstract

A 'collusion puzzle' exists by which, even though increasing the number of firms reduces the ability to tacitly collude, and leads to a collapse in collusion in experimental markets with three or more firms, in natural markets there are such numbers of firms colluding successfully. We present an experiment showing that, if managers are deferential towards an authority, firms can induce more collusion by delegating production decisions to middle managers and providing suitable informal nudges. This holds not only with two but also with four firms. We are also able to distinguish compliance effects from coordination effects.

Original language	English
Pages (from-to)	13-37
Number of pages	15
Journal	Southern Economic Journal
Volume	82
Issue number	1
Early online date	23 Mar 2015
DOIs	https://doi.org/10.1002/soej.12065
Publication status	Published - Jul 2015

Keywords

Collusion
Cournot
oligopoly
authority
delegation
coordination

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10.1002/soej.12065

SONNTAG_ZIZZO_Institutional_Authority_and_CollusionAccepted author manuscript, 2.07 MB

CCP Centre for Competition Policy Phase 2 (2009-14)
Hviid, M., Akman, P., Davies, S., Hargreaves-Heap, S., Harker, M., Kassim, H., Lyons, B., Stephan, A., Sugden, R., Waddams, C., Wadlow, C., Zizzo, D., Allen-Rogers, D., Allen-Rogers, D. & Allen-Rogers, D.
Economic and Social Research Council
1/09/09 → 30/11/14
Project: Research

Cite this

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Institutional authority and collusion

Abstract

Keywords

Access to Document

Projects

CCP Centre for Competition Policy Phase 2 (2009-14)

Cite this