Université de Lausanne
Faculté des
HEC
Département d'économétrie
et d'économie politique
Cahier de recherches économiques du
DEEP No. 13.02
Catherine Roux and Christian Thöni
Collusion Among Many Firms: The Disciplinary Power of Targeted Punishment
February 2013
Abstract
We explore targeted punishment as an explanation for collusion among many firms.
In a series of Cournot oligopoly experiments with various numbers of firms,
we compare production decisions with and without the possibility to target punishment
at specific market participants. We find strong evidence that targeted punishment
enables firms to establish and maintain collusion. More so, we find that the
collusive effect of targeted punishment is even stronger in markets with more
competitors, suggesting a reversal of the conventional wisdom that collusion
is easier the fewer the firms.
Keywords: Cournot oligopoly; Experiments; Collusion; Targeted punishment
JEL classification: L13 ; K21 ; C91