IDEAS home Printed from https://ideas.repec.org/p/doj/eagpap/201604.html
   My bibliography  Save this paper

Collusion Along the Learning Curve: Theory and Evidence from the Semiconductor Industry

Author

Listed:
  • Danial Asmat

    (Antitrust Division, U.S. Department of Justice)

Abstract

This paper studies the effectiveness of collusion in the DRAM cartel. Like other high technology products, DRAM is characterized by learning-by-doing and multiproduct competition. I hypothesize that collusion is more difficult to sustain on a new generation, where learning is high, than an old generation, where learning is low. A higher learning rate makes defection from a collusive equilibrium more attractive by reducing future cost. Empirical analysis exploits variation between cartelization and competition to estimate the change in firms' output decisions on each generation. Consistent with the hypothesis, cartel participants are estimated to cut output more on the oldest generation than newer generations. Output decisions on the newest generation also show evidence consistent with defection from collusive equilibria. Lastly, the paper presents a theoretical framework to analyze collusive equilibria with learning-by-doing and multiproduct competition. The model motivates various pieces of evidence that competition authorities can compile to guide antitrust investigations in high technology markets.

Suggested Citation

  • Danial Asmat, 2016. "Collusion Along the Learning Curve: Theory and Evidence from the Semiconductor Industry," EAG Discussions Papers 201604, Department of Justice, Antitrust Division, revised Jul 2019.
  • Handle: RePEc:doj:eagpap:201604
    as

    Download full text from publisher

    File URL: https://www.justice.gov/atr/collusion-along-learning-curve-theory-and-evidence-semiconductor-industry
    Download Restriction: no
    ---><---

    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:doj:eagpap:201604. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tung Vu (email available below). General contact details of provider: https://edirc.repec.org/data/atrgvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.