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Collusion, Antitrust Policy and Leniency Programs: Experiments and Theory

Dijkstra, P., 2014, Groningen: University of Groningen, SOM research school. 206 p.

Research output: ThesisThesis fully internal (DIV)Academic

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  • Peter Dijkstra
This dissertation tries to increase our understanding of collusion, antitrust policy and leniency programs. Under collusion, firms make agreements to restrict competition, typically by fixing prices. Antitrust policy aims to reduce such behavior. One of its tools is leniency programs, under which firms may receive a reduction of fines if they report their cartel to the authorities.
In reality we do not observe all cartels. Therefore we conduct economic experiments in which students participate and earn money based on their performance. By comparing different settings we are able to investigate the impact of several aspects on collusion.
First, we investigate whether – and if so when – price leadership facilitates tacit collusion. We find that price leadership facilitates collusion, if the price leader obtains a market share of at most 50%. We also observe more collusion when firms have equal market shares.
Second, we study collusion for different industry structures that are regulated by means of yardstick competition. An example is the market for energy distribution in the Netherlands. Here as well, we find more collusion if firms have equal market shares. We also find more collusion if the number of firms increases, when all firms have an equal market share.
Third, we find that implementing a leniency program leads to fewer cartels and lower prices. However, these effects are temporary as many students agree to continue to collude once their cartel will be convicted.
Original languageEnglish
QualificationDoctor of Philosophy
Awarding Institution
Supervisors/Advisors
Award date13-Oct-2014
Place of PublicationGroningen
Publisher
Print ISBNs978-90-367-7264-8
Electronic ISBNs978-90-367-7263-1
Publication statusPublished - 2014

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