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Price Fixing Hits Home: An Empirical Study of US Price-Fixing Conspiracies

Author

Listed:
  • Margaret C. Levenstein

    (University of Michigan Ross School of Business)

  • Valerie Y. Suslow

    (Johns Hopkins University Carey School of Business)

Abstract

This paper analyzes a sample of Section 1, Sherman Act price fixing cases brought by the US Department of Justice between 1961 and 2013. Over 500 cartels were prosecuted during this period. The determinants of cartel formation and cartel breakup are estimated, including analysis of the impact of the discount rate, business cycles, and antitrust policy. We find that cartels are more likely to break up during periods of high real interest rates, presumably because higher interest rates are associated with greater impatience. The adoption of a stronger amnesty policy has no significant impact on cartel breakup over this period, although the results suggest some association with lower cartel formation rates.

Suggested Citation

  • Margaret C. Levenstein & Valerie Y. Suslow, 2016. "Price Fixing Hits Home: An Empirical Study of US Price-Fixing Conspiracies," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 48(4), pages 361-379, June.
    • Handle: RePEc:kap:revind:v:48:y:2016:i:4:d:10.1007_s11151-016-9520-5
    DOI: 10.1007/s11151-016-9520-5
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    2. Carol Osler & Alasdair Turnbull, 2016. "Dealer Trading at the Fix," Working Papers 101R, Brandeis University, Department of Economics and International Business School, revised Jun 2017.
    3. Ferrés, Daniel & Ormazabal, Gaizka & Povel, Paul & Sertsios, Giorgo, 2021. "Capital structure under collusion," Journal of Financial Intermediation, Elsevier, vol. 45(C).
    4. Roger D. Blair & Wenche Wang, 2018. "The NCAA Cartel and Antitrust Policy," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 52(2), pages 351-368, March.
    5. Katsoulacos, Yannis & Motchenkova, Evgenia & Ulph, David, 2015. "Penalizing cartels: The case for basing penalties on price overcharge," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 70-80.
    6. Mats A. Bergman & Johan Lundberg & Sofia Lundberg & Johan Y. Stake, 2020. "Interactions Across Firms and Bid Rigging," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 56(1), pages 107-130, February.
    7. Tanja Artiga González & Markus Schmid & David Yermack, 2019. "Does Price Fixing Benefit Corporate Managers?," Management Science, INFORMS, vol. 65(10), pages 4813-4840, October.
    8. Carmen García & Joan Ramon Borrell & José Manuel Ordóñez-de-Haro & Juan Luis Jiménez, 2022. "Managers’ expectations, business cycles and cartels’ life cycle," European Journal of Law and Economics, Springer, vol. 53(3), pages 451-484, June.
    9. Georg Clemens & Holger A. Rau, 2022. "Either with us or against us: experimental evidence on partial cartels," Theory and Decision, Springer, vol. 93(2), pages 237-257, September.
    10. Willem H. Boshoff & Rossouw van Jaarsveld, 2019. "Recurrent Collusion: Cartel Episodes and Overcharges in the South African Cement Market," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 54(2), pages 353-380, March.
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