New study reveals optimal timing for forming business cartels under uncertainty
Understanding when cartels are formed is crucial for antitrust agencies. A new study looks at the best time to join a cartel, considering uncertainty and irreversible decisions. The researchers use a real-options framework to analyze the optimal timing of cartel formation. They find that firms will form a cartel when market demand reaches a certain level. This study provides insights for antitrust agencies to prevent cartels from forming in both developed and developing countries.