Either with us or against us: experimental evidence on partial cartels

Abstract This paper analyzes the coordination challenge a partial cartel faces when payoff asymmetries between potential insiders and outsiders are large. We introduce two experimental treatments: standard treatment where complete can be supported in Nash equilibrium modified both equilibrium. To assess role of communication treatments additionally run with “chat option,” yielding four total. Our results show that subjects frequently reject formation cartels treatments. In all more likely to form than cartels. The implications these important for antitrust: members may jeopardize Yet formed instead, if institutional mechanisms frequent used