Date of this Version
International Journal of Industrial Organization
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.
© 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/
Collusion; Cartel; Antitrust enforcement; Cement
Harrington, J. E., Hüschelrath, K., Laitenberger, U., & Smuda, F. (2014). The Discontent Cartel Member and Cartel Collapse: The Case of the German Cement Cartel. International Journal of Industrial Organization, 42 106-119. http://dx.doi.org/10.1016/j.ijindorg.2015.07.005
Date Posted: 27 November 2017
This document has been peer reviewed.