Business Economics and Public Policy Papers

Document Type

Journal Article

Date of this Version

11-2014

Publication Source

International Journal of Industrial Organization

Volume

42

Start Page

106

Last Page

119

DOI

10.1016/j.ijindorg.2015.07.005

Abstract

We hypothesize a particular source of cartel instability and explore its relevance to understanding cartel dynamics. The cartel instability is rooted in the observation that, upon cartel formation, the relative positions of firms are often fixed which may lead some growth-conscious members to be discontent. This incongruity between a cartel member's allocated market share and its desired market share may result in systematic deviations and the eventual collapse of the cartel. This hypothesis is then taken to the German cement cartel of 1991–2002. We argue that Readymix was such a discontent cartel member and, using a rich pricing data set, are able to characterize how Readymix deviated, how other firms responded, and how it led to the collapse of the cartel.

Copyright/Permission Statement

© 2014. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/

Keywords

Collusion; Cartel; Antitrust enforcement; Cement

Share

COinS
 

Date Posted: 27 November 2017

This document has been peer reviewed.