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Harm And Overcharge In The South African Precast Concrete Products Cartel

Author

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  • Junior Khumalo
  • Jeffrey Mashiane
  • Simon Roberts

Abstract

The harmful effects of cartels depend on a number of features, including the size of the overcharge and the durability of the cartel. This article examines the effect of a very long-running cartel in a market with low barriers to entry and unstable demand—the South African precast concrete products cartel. We describe how the cartel's arrangements overcame these dual challenges and examine mark-ups against alternative measures of the competitive counterfactual. This includes a discussion of the use of punishment mechanisms and of how cartelists adapted to entrants, the implications of vertical integration, and the effect of information exchange on firms apparently not part of the explicit cartel. These considerations also affect the transition after the end of the explicit cartel arrangements and the extent to which coordinated outcomes may persist. There are further insights from the analysis for the determination of penalties by competition authorities.

Suggested Citation

  • Junior Khumalo & Jeffrey Mashiane & Simon Roberts, 2014. "Harm And Overcharge In The South African Precast Concrete Products Cartel," Journal of Competition Law and Economics, Oxford University Press, vol. 10(3), pages 621-646.
    • Handle: RePEc:oup:jcomle:v:10:y:2014:i:3:p:621-646.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhu005
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    Citations

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    Cited by:

    1. Simon Roberts & Witness Simbanegavi & Thando Vilakazi, 2023. "Cementing regional integration or building walls? Competition, cartels and regional integration in the cement industry in Africa," The World Economy, Wiley Blackwell, vol. 46(2), pages 437-452, February.
    2. Hung-Hao Chang, 2017. "Ex Post Evaluation Of Antitrust And Unfair Competition Fines On Firms: Empirical Evidence From Taiwan," Journal of Competition Law and Economics, Oxford University Press, vol. 13(1), pages 103-124.
    3. World Bank Group, 2016. "South Africa Economic Update, February 2016," World Bank Publications - Reports 23762, The World Bank Group.
    4. Willem H. Boshoff, 2015. "Illegal Cartel Overcharges in Markets with a Legal Cartel History: Bitumen Prices in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 83(2), pages 220-239, June.

    More about this item

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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