Econometric evidence to target tacit Collusion in oligopolistic markets

andreoli-versbach, patrick ; franck, jens-uwe;

Tacit collusion may reduce welfare comparably to explicit collusion, but it
remains mostly unaddressed by antitrust enforcement that greatly depends on
evidence of explicit communication. We propose to target specific elements of
firms� behavior that facilitate tacit collusion by providing quantitative evidence
that links these actions to an anticompetitive market outcome. We apply our approach
to incidents on the Italian gasoline market, where the market leader unilaterally
announced its commitment to a policy of sticky pricing and large price
changes that facilitated price alignment and coordination of price changes.
Antitrust policy must distinguish such active promotion of a collusive strategy
from passive, best-response, alignment. Our results imply the necessity of stronger
legal instruments that target unilateral conduct that aims at bringing about
collusion.