How do antitrust regimes impact on cartel formation and managers’ labor market? An experiment

Miguel A. Fonseca; Ricardo Gonçalves; Joana Pinho; Giovanni A. Tabacco

doi:10.1016/j.jebo.2022.10.031

How do antitrust regimes impact on cartel formation and managers’ labor market? An experiment

Miguel A. Fonseca^*, Ricardo Gonçalves, Joana Pinho, Giovanni A. Tabacco

^*Autor correspondente para este trabalho

Resultado de pesquisa › revisão de pares

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Resumo

We explore the impacts of different antitrust regimes on managers’ labor contracts, when shareholders are intent on their managers engaging in price fixing activities. We compare legal regimes that fine firms to regimes that prosecute managers. We build a theoretical model, which we take to the laboratory. We observe contract choices of shareholders for a given legal regime, as well as the probability of managers forming explicit cartels and coordinating on prices in a repeated Bertrand oligopoly, taking contract and legal regime as given. Our results suggest that there is less collusion when the legal regime prosecutes managers. High-powered contracts do not incentivize cartel formation or price coordination effectively, irrespective of legal regime. Nevertheless, high-powered contracts were most frequently chosen by shareholders, often with collusive intents.

Idioma original	English
Páginas (de-até)	643-662
Número de páginas	20
Revista	Journal of Economic Behavior and Organization
Volume	204
DOIs	https://doi.org/10.1016/j.jebo.2022.10.031
Estado da publicação	Publicado - dez 2022

Acesso ao documento

10.1016/j.jebo.2022.10.031Licença:

56884232Final published version, 1,23 MBLicença:

http://hdl.handle.net/10400.14/39392Licença:

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1 Ativos

CEGE: Research Center in Management and Economics
Silva, M., Sousa, R., Alves, P., Madsen, A., Lourenço, A., Carvalho, A. S., Andrade, A., Silva, P. D., Vlačić, B., Martins, C., Gomes, C., Gevrek, Z. E., Oliveira, F. G. D., Faria, G., Marreiros, H., Pinho, J., Machado, J., Araújo, J., Pinto, J., Rego, A., Gaspar, J. M., Corbo, L., Costa, L., Fernandes, L., Sottomayor, M., Martins, N., Hernández-Marrero, P., Gonçalves, R., Ribeiro, R., Coelho, S. L., Pereira, S. M., Silva, S., Rodrigues, V., Sotiros, D. G., Valverde, C. J. L., Leitão, A., Julião, J., Tavares, M. F. F., Lages, C. R., Elmashhara, M. G. & Teymourifar, A.
Fundação para a Ciência e a Tecnologia
1/01/20 → 31/12/23
Projeto

Citação

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title = "How do antitrust regimes impact on cartel formation and managers{\textquoteright} labor market? An experiment",

abstract = "We explore the impacts of different antitrust regimes on managers{\textquoteright} labor contracts, when shareholders are intent on their managers engaging in price fixing activities. We compare legal regimes that fine firms to regimes that prosecute managers. We build a theoretical model, which we take to the laboratory. We observe contract choices of shareholders for a given legal regime, as well as the probability of managers forming explicit cartels and coordinating on prices in a repeated Bertrand oligopoly, taking contract and legal regime as given. Our results suggest that there is less collusion when the legal regime prosecutes managers. High-powered contracts do not incentivize cartel formation or price coordination effectively, irrespective of legal regime. Nevertheless, high-powered contracts were most frequently chosen by shareholders, often with collusive intents.",

keywords = "Antitrust, Cartel formation, Experiment, Managerial compensation",

author = "Fonseca, {Miguel A.} and Ricardo Gon{\c c}alves and Joana Pinho and Tabacco, {Giovanni A.}",

note = "Funding Information: This paper is part of a research project funded by the Organisation of Economic Co-operation and Development, to whom we would like to thank. In addition, Ricardo Gon{\c c}alves gratefully acknowledges financial support from Funda{\c c}{\~a}o para a Ci{\^e}ncia e Tecnologia (Grant UID/GES/00731/2013). We thank Nicholas Lacourse and Hannes Titeca for their research assistance. We also thank Adriana Alventosa, Jo{\~a}o Correia da Silva, and seminar participants at the University of Nanterre and University of Reading for excellent comments. The usual disclaimer applies. Publisher Copyright: {\textcopyright} 2022 The Author(s)",

year = "2022",

month = dec,

doi = "10.1016/j.jebo.2022.10.031",

language = "English",

volume = "204",

pages = "643--662",

journal = "Journal of Economic Behavior and Organization",

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TY - JOUR

T1 - How do antitrust regimes impact on cartel formation and managers’ labor market? An experiment

AU - Fonseca, Miguel A.

AU - Gonçalves, Ricardo

AU - Pinho, Joana

AU - Tabacco, Giovanni A.

N1 - Funding Information: This paper is part of a research project funded by the Organisation of Economic Co-operation and Development, to whom we would like to thank. In addition, Ricardo Gonçalves gratefully acknowledges financial support from Fundação para a Ciência e Tecnologia (Grant UID/GES/00731/2013). We thank Nicholas Lacourse and Hannes Titeca for their research assistance. We also thank Adriana Alventosa, João Correia da Silva, and seminar participants at the University of Nanterre and University of Reading for excellent comments. The usual disclaimer applies. Publisher Copyright: © 2022 The Author(s)

PY - 2022/12

Y1 - 2022/12

N2 - We explore the impacts of different antitrust regimes on managers’ labor contracts, when shareholders are intent on their managers engaging in price fixing activities. We compare legal regimes that fine firms to regimes that prosecute managers. We build a theoretical model, which we take to the laboratory. We observe contract choices of shareholders for a given legal regime, as well as the probability of managers forming explicit cartels and coordinating on prices in a repeated Bertrand oligopoly, taking contract and legal regime as given. Our results suggest that there is less collusion when the legal regime prosecutes managers. High-powered contracts do not incentivize cartel formation or price coordination effectively, irrespective of legal regime. Nevertheless, high-powered contracts were most frequently chosen by shareholders, often with collusive intents.

AB - We explore the impacts of different antitrust regimes on managers’ labor contracts, when shareholders are intent on their managers engaging in price fixing activities. We compare legal regimes that fine firms to regimes that prosecute managers. We build a theoretical model, which we take to the laboratory. We observe contract choices of shareholders for a given legal regime, as well as the probability of managers forming explicit cartels and coordinating on prices in a repeated Bertrand oligopoly, taking contract and legal regime as given. Our results suggest that there is less collusion when the legal regime prosecutes managers. High-powered contracts do not incentivize cartel formation or price coordination effectively, irrespective of legal regime. Nevertheless, high-powered contracts were most frequently chosen by shareholders, often with collusive intents.

KW - Antitrust

KW - Cartel formation

KW - Experiment

KW - Managerial compensation

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U2 - 10.1016/j.jebo.2022.10.031

DO - 10.1016/j.jebo.2022.10.031

M3 - Article

AN - SCOPUS:85141764192

VL - 204

SP - 643

EP - 662

JO - Journal of Economic Behavior and Organization

JF - Journal of Economic Behavior and Organization

SN - 0167-2681

ER -

How do antitrust regimes impact on cartel formation and managers’ labor market? An experiment

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CEGE: Research Center in Management and Economics

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