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Cartel Quotas under Majority Rule

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  • Cave, Jonathan
  • Salant, Stephen W

Abstract

The authors examine the choice of quotas by legal volume-restricting organizations: cartels, commodity agreements, agricultural marketing boards, and prorationing boards. Unlike their illegal counterparts, legal cartels have published regulations and broader enforcement capabilities. However, differences in costs and size among cartel members still make quota selection contentious. Conflicts over quotas are typically resolved by voting. Side-payments to influence votes are prohibited. The authors examine the predicted effects of this real-world voting institution on prices and welfare. They also deduce the economic consequences of exogenous political changes, such as alterations in the voting weights or in the identity of the voters. Copyright 1995 by American Economic Association.

Suggested Citation

  • Cave, Jonathan & Salant, Stephen W, 1995. "Cartel Quotas under Majority Rule," American Economic Review, American Economic Association, vol. 85(1), pages 82-102, March.
  • Handle: RePEc:aea:aecrev:v:85:y:1995:i:1:p:82-102
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    Cited by:

    1. Heintzelman, Martin D. & Salant, Stephen W. & Schott, Stephan, 2009. "Putting free-riding to work: A Partnership Solution to the common-property problem," Journal of Environmental Economics and Management, Elsevier, vol. 57(3), pages 309-320, May.
    2. Nikolaus Fink & Philipp Schmidt-Dengler & Konrad Stahl & Christine Zulehner, 2017. "Registered cartels in Austria: an overview," European Journal of Law and Economics, Springer, vol. 44(3), pages 385-422, December.
    3. Péter Eső & Volker Nocke & Lucy White, 2010. "Competition for scarce resources," RAND Journal of Economics, RAND Corporation, vol. 41(3), pages 524-548.
    4. Cesar Martinelli & Richard Sicotte, 2004. "Voting in Cartels: Theory and Evidence from the Shipping Industry," Working Papers 0404, Centro de Investigacion Economica, ITAM, revised 05 Mar 2004.
    5. de Mesnard, Louis, 2009. "Is the French mobile phone cartel really a cartel?," International Journal of Production Economics, Elsevier, vol. 122(2), pages 663-677, December.
    6. Jaime R. Marquez, 1992. "Life expectancy of international cartels: an empirical analysis," International Finance Discussion Papers 439, Board of Governors of the Federal Reserve System (U.S.).
    7. Herbert Hovenkamp, 2011. "Harm to Competition Under the 2010 Horizontal Merger Guidelines," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 39(1), pages 3-18, August.
    8. Janda, Karel, 2009. "Signaling the Strength of a Market Entrant," MPRA Paper 17007, University Library of Munich, Germany.
    9. Gupta, Bishnupriya, 1997. "Collusion in the Indian Tea Industry in the Great Depression: An Analysis of Panel Data," Explorations in Economic History, Elsevier, vol. 34(2), pages 155-173, April.
    10. Shcherbakov, Oleksandr & Wakamori, Naoki, 2015. "A simple way to identify the degree of collusion under proportional reduction," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 497, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    11. repec:eee:eneeco:v:68:y:2017:i:c:p:410-422 is not listed on IDEAS
    12. Simon Loertscher & Leslie Marx, 2014. "An Oligopoly Model for Analyzing and Evaluating (Re)-Assignments of Spectrum Licenses," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 45(3), pages 245-273, November.
    13. Nie, Pu-yan & Chen, You-hua, 2012. "Duopoly competitions with capacity constrained input," Economic Modelling, Elsevier, vol. 29(5), pages 1715-1721.
    14. Pu-yan Nie, 2014. "Effects of capacity constraints on mixed duopoly," Journal of Economics, Springer, vol. 112(3), pages 283-294, July.

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