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Cartel Quotas under Majority Rule

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  • Cave, Jonathan
  • Salant, Stephen W

Abstract

The authors examine the choice of quotas by legal volume-restricting organizations: cartels, commodity agreements, agricultural marketing boards, and prorationing boards. Unlike their illegal counterparts, legal cartels have published regulations and broader enforcement capabilities. However, differences in costs and size among cartel members still make quota selection contentious. Conflicts over quotas are typically resolved by voting. Side-payments to influence votes are prohibited. The authors examine the predicted effects of this real-world voting institution on prices and welfare. They also deduce the economic consequences of exogenous political changes, such as alterations in the voting weights or in the identity of the voters. Copyright 1995 by American Economic Association.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 85 (1995)
Issue (Month): 1 (March)
Pages: 82-102

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Handle: RePEc:aea:aecrev:v:85:y:1995:i:1:p:82-102

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Cited by:
  1. Heintzelman, Martin D. & Salant, Stephen W. & Schott, Stephan, 2009. "Putting free-riding to work: A Partnership Solution to the common-property problem," Journal of Environmental Economics and Management, Elsevier, vol. 57(3), pages 309-320, May.
  2. Cesar Martinelli & Richard Sicotte, 2004. "Voting in Cartels: Theory and Evidence from the Shipping Industry," Working Papers 0404, Centro de Investigacion Economica, ITAM, revised 05 Mar 2004.
  3. Péter Eső & Volker Nocke & Lucy White, 2010. "Competition for scarce resources," RAND Journal of Economics, RAND Corporation, vol. 41(3), pages 524-548.
  4. Jaime Marquez, 1992. "Life expectancy of international cartels: an empirical analysis," International Finance Discussion Papers 439, Board of Governors of the Federal Reserve System (U.S.).
  5. Herbert Hovenkamp, 2011. "Harm to Competition Under the 2010 Horizontal Merger Guidelines," Review of Industrial Organization, Springer, vol. 39(1), pages 3-18, August.
  6. de Mesnard, Louis, 2009. "Is the French mobile phone cartel really a cartel?," International Journal of Production Economics, Elsevier, vol. 122(2), pages 663-677, December.
  7. Nie, Pu-yan & Chen, You-hua, 2012. "Duopoly competitions with capacity constrained input," Economic Modelling, Elsevier, vol. 29(5), pages 1715-1721.
  8. Janda, Karel, 2009. "Signaling the Strength of a Market Entrant," MPRA Paper 17007, University Library of Munich, Germany.

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