ABSTRACT
Effective conspiracies are more easily formed in posted-offer and in sealed-bid markets than in double auction markets. A feature of double auctions is isolated as the possible source of the behavioral differences. The double auction presents conspirators with continuous temptations to defect from conspiratorial agreements. The chapter argues that the competitive access to buyers of the double auction is a key feature that acts as a nonfacilitating device for conspiracy. The "success" of a conspiracy can be analyzed at five different levels. Do potential agents recognize their common self-interest and explore and discuss conspiracies? Does a conspiracy actually evolve in the sense that agents manage to reach an agreement? Is the agreement implemented? Does the implemented agreement actually influence the market? Are the effects to the advantage of the conspirators? The chapter is concerned with these various possibilities and their relationship to the details of market organization.
