How Do Cartels Operate?

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Business Economics and Public Policy Papers
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cartels
microeconomics
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Economics
Public Affairs, Public Policy and Public Administration
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Harrington, Joseph E
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This paper distills and organizes facts about cartels from about 20 European Commission decisions over 2000–2004. It describes the properties of a collusive outcome in terms of the setting of price and a market allocation, monitoring of agreements with respect to price but more importantly sales, punishment methods for enforcing an agreement and also the use of buy-backs to compensate cartel members, methods for responding to external disruptions from non-cartel sup- pliers and handling over-zealous sales representatives, and operational procedures in terms of the frequency of meetings and the cartel’s organizational structure.

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2006-01-01
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Foundations and Trends in Microeconomics
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At the time of publication, author Joseph E. Harrington, Jr. was affiliated with Johns Hopkins University. Currently (August 2017), he is a faculty member at the Wharton School at the University of Pennsylvania.
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