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Anatomy of Cartel Contracts

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Author Info

  • Hyytinen, Ari

    ()
    (University of Jyväskylã)

  • Steen, Frode

    ()
    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Toivanen, Otto

    ()
    (K.U.Leuven)

Abstract

We 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 Info

Paper provided by Department of Economics, Norwegian School of Economics in its series Discussion Paper Series in Economics with number 25/2012.

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Length: 56 pages
Date of creation: 31 Dec 2012
Date of revision:
Handle: RePEc:hhs:nhheco:2012_025

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Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Phone: +47 55 959 277
Fax: 5595 9100
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Web page: http://www.nhh.no/sam/
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Keywords: Cartels; contracts; antitrust; competition policy; industry heterogeneity.;

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References

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Cited by:
  1. Koski, Heli & Pajarinen, Mika, 2013. "Empirical Evaluation of the Effectiveness of Competition Policy," ETLA Working Papers 15, The Research Institute of the Finnish Economy.

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