Cartel price announcements: The vitamins industry
The primary manufacturers of vitamins admitted to participating in international market-share-agreement cartels for several years during the 1990s. Their announced price increases appeared in leading trade journals. We show that price announcements during the cartel period, and the lead times before these prices took effect, were fundamentally different in character from price announcements when explicit collusion was less likely. These differences are consistent with our model of price announcements where we account for the importance to the cartel of buyer acceptance of, or resistance to, a price increase. Acceptance avoids costly market-share reallocations among members of an explicit cartel. Logit estimates show that after 1985, the likelihood of a price announcement is largely driven by the length of time between announcements, rather than cost or demand factors, suggesting that the price announcements after 1985 stem from cartel meetings.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Deneckere, Raymond J & Kovenock, Dan & Lee, Robert, 1992.
"A Model of Price Leadership Based on Consumer Loyalty,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 40(2), pages 147-56, June.
- Deneckere, R. & Kovenock, D. & Lee, R.E., 1988. "A Model of Price Leadership Based on Consumer Loyalty," Purdue University Economics Working Papers 947, Purdue University, Department of Economics.
- John M. Connor, 1997. "The Global Lysine Price-Fixing Conspiracy of 1992–1995," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 19(2), pages 412-427.
- Kovenock, Dan & Widdows, Kealoha, 1998.
"Price leadership and asymmetric price rigidity,"
European Journal of Political Economy,
Elsevier, vol. 14(1), pages 167-187, February.
- Lawrence White, 2001.
"Lysine and Price Fixing: How Long? How Severe?,"
Review of Industrial Organization,
Springer, vol. 18(1), pages 23-31, February.
- Harrington, Joseph E., 2006. "How Do Cartels Operate?," Foundations and Trends(R) in Microeconomics, now publishers, vol. 2(1), pages 1-105, August.
- Raymond Deneckere & Dan Kovenock, 1988.
773, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Furth, D. & Kovenock, D., 1990.
"Price Leadership In A Duopoly With Capacity Constraints And Product Differentiation,"
Purdue University Economics Working Papers
992, Purdue University, Department of Economics.
- Dave Furth & Dan Kovenock, 1993. "Price leadership in a duopoly with capacity constraints and product differentiation," Journal of Economics, Springer, vol. 57(1), pages 1-35, February.
- Rotemberg, Julio J & Saloner, Garth, 1990. "Collusive Price Leadership," Journal of Industrial Economics, Wiley Blackwell, vol. 39(1), pages 93-111, September.
- George J. Stigler, 1947. "The Kinky Oligopoly Demand Curve and Rigid Prices," Journal of Political Economy, University of Chicago Press, vol. 55, pages 432.
- Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983.
"On the Stability of Collusive Price Leadership,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 16(1), pages 17-25, February.
- Booth, D L, et al, 1991. "An Empirical Model of Capacity Expansion and Pricing in an Oligopoly with Barometric Price Leadership: A Case Study of the Newsprint Industry in North America," Journal of Industrial Economics, Wiley Blackwell, vol. 39(3), pages 255-76, March.
- Cooper, David J., 1997. "Barometric price leadership," International Journal of Industrial Organization, Elsevier, vol. 15(3), pages 301-325, May.
- Joseph E. Harrington, Jr, 2006. "How Do Cartels Operate?," Economics Working Paper Archive 531, The Johns Hopkins University,Department of Economics.
- Marshall, Robert C. & Marx, Leslie M., 2007. "Bidder collusion," Journal of Economic Theory, Elsevier, vol. 133(1), pages 374-402, March.
- Charles A. Holt & David T. Scheffman, 1987. "Facilitating Practices: The Effects of Advance Notice and Best-Price Policies," RAND Journal of Economics, The RAND Corporation, vol. 18(2), pages 187-197, Summer.
When requesting a correction, please mention this item's handle: RePEc:eee:indorg:v:26:y:2008:i:3:p:762-802. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If references are entirely missing, you can add them using this form.