Institutional Authority and Collusion
- Author(s)
- Axel Sonntag, Daniel John Zizzo
- 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 toward 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.
- Organisation(s)
- Department of Economics
- External organisation(s)
- Newcastle University
- Journal
- Southern Economic Journal
- Volume
- 82
- Pages
- 13-37
- No. of pages
- 25
- ISSN
- 0038-4038
- DOI
- https://doi.org/10.1002/soej.12065
- Publication date
- 07-2015
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502013 Industrial economics
- Keywords
- ASJC Scopus subject areas
- Economics and Econometrics
- Portal url
- https://ucris.univie.ac.at/portal/en/publications/institutional-authority-and-collusion(dcabf24f-e28c-4ae0-a644-919fdcb1c8f8).html