Anatomy of Cartel Contracts
AbstractWe study cartel contracts using data on 18 contract clauses of 109 legal Finnish manufacturing cartels. One third of the clauses relate to raising profits; the others deal with instability through incentive compatibility, cartel organization, or external threats. Cartels use three main approaches to raise profits: Price, market allocation, and specialization. These appear to be substitutes. Choosing one has implications on how cartels deal with instability. Simplifying, we find that large cartels agree on prices, cartels in homogenous goods industries allocate markets, and small cartels avoid competition through specialization.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9362.
Date of creation: Feb 2013
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Other versions of this item:
- K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-13 (All new papers)
- NEP-COM-2013-04-13 (Industrial Competition)
- NEP-HME-2013-04-13 (Heterodox Microeconomics)
- NEP-IND-2013-04-13 (Industrial Organization)
- NEP-LAW-2013-04-13 (Law & Economics)
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