Delegation and Strategic Collusion under Antitrust Policies: An Experiment

36 Pages Posted: 6 May 2022 Last revised: 1 Dec 2023

See all articles by Jeong Yeol Kim

Jeong Yeol Kim

KDI School of Public Policy and Management

Date Written: April 30, 2022

Abstract

In a delegation, firm behavior can vary depending on how firm owners determine the incentives of corporate executives who operate firms directly. This study employs a lab experiment to investigate the impact of delegation on collusive behavior of firms in a situation where antitrust policies exist. The experiment highlights the following two key findings: (i) Firms form cartels in a strategic way by intermittently adjusting their collusive and competitive output, thereby evading antitrust regulations, rather than consistently collusive output to maximize joint profits. (ii) delegation does not necessarily increase the overall number of cartels, but it may change how to form a cartel.

Keywords: Delegation, Collusion, Cartel, Antitrust

JEL Classification: C9 K21 L4 L44

Suggested Citation

Kim, Jeong Yeol, Delegation and Strategic Collusion under Antitrust Policies: An Experiment (April 30, 2022). Available at SSRN: https://ssrn.com/abstract=4097249 or http://dx.doi.org/10.2139/ssrn.4097249

Jeong Yeol Kim (Contact Author)

KDI School of Public Policy and Management ( email )

263 Namsejong-ro
Sejong-si, 30149
Korea, Republic of (South Korea)

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