Partial cartels drive up prices, insiders and outsiders not aligned.
The article explores how firms adjust their prices when they form partial cartels through communication in experimental markets. The researchers used a game to simulate this scenario and found that when a partial cartel is formed, prices in the market increase for all firms. Surprisingly, prices set by cartel members and non-members can differ, which goes against what was expected. This discrepancy is due to communication helping cartel members coordinate better and reach a balanced strategy. The study highlights the importance of communication in cartels and how it affects market outcomes.