Collusion with asymmetric retailers: Evidence from a gasoline price-fixing case∗

We provide a description of the internal functioning of a price-posting retail market cartel based on an analysis of court documents containing the recorded conversations of participants in actual gasoline cartels operating in Québec. We characterize the organization and the pricing mechanism of the cartels, and we relate our findings to the theoretical literature, proposing a framework for understanding the arrangement. It has two important features: asymmetric pricing cycles, and a transfer mechanism to low-cost stations based on order of play. Second, we study the breakdown of collusion following the investigation announcement to determine the effect of explicit communication. ∗We have benefited from helpful comments from John Asker, Allan Collard-Wexler, David Genesove, Gautam Gowrisakaran, Joe Harrington, Ken Hendricks, Tom Holmes, Bob Town, and seminar participants at Concordia University, UBC IO conference, CIRPEE Conference, IIOC, UCLA, University of Western Ontario, University of Waterloo, Yale, University of Minnesota, and University of Wisconsin. We also wish to thank people at the Canadian Competition Bureau and the Régie de l’énergie du Québec for their cooperation throughout the completion of this project. We received excellent assistance from Pierre-Olivier Lachance, Laurent Da-Silva, Jonathan Deslauriers, and CharlesDavid Sauvageau-Franche. Correspondence to Robert Clark: HEC Montréal, CIRANO and CIRPÉE, Montreal, Quebec; Phone: (514) 340-7034; Email: [email protected], and Jean-François Houde: University of Wisconsin-Madison, Madison, Wisconsin and CIRANO; Phone: (608) 262-3805; Email: [email protected]