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Estimating Cartel Behavior: The Case of the Cement Cartel in Hokkaido

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  • Nishiwaki, Masato

Abstract

This paper empirically studies the behavior of an illegal cartel. Based on the case of the Japanese cement industry cartel in the Hokkaido prefecture,the paper reached the following two conclusions. First,a widely used specification test does not support the fully collusive pricing behavior. Second,on examining,the behavior of the cartel,it was found that the cartel gradually increased prices and then gradually reduced prices after reaching the highest level of price. This pricing dynamic is consistent with illegal cartel theory prediction.

Suggested Citation

  • Nishiwaki, Masato, 2020. "Estimating Cartel Behavior: The Case of the Cement Cartel in Hokkaido," Economic Review, Hitotsubashi University, vol. 71(1), pages 35-48, January.
    • Handle: RePEc:hit:ecorev:v:71:y:2020:i:1:p:35-48
    DOI: 10.15057/30960
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    References listed on IDEAS

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    1. Joseph E. Harrington, 2005. "Optimal Cartel Pricing In The Presence Of An Antitrust Authority," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 145-169, February.
    2. Harrington, Joseph Jr., 1989. "Collusion among asymmetric firms: The case of different discount factors," International Journal of Industrial Organization, Elsevier, vol. 7(2), pages 289-307, June.
    3. Joseph E. Harrington, Jr., 2004. "Cartel Pricing Dynamics in the Presence of an Antitrust Authority," RAND Journal of Economics, The RAND Corporation, vol. 35(4), pages 651-673, Winter.
    4. Harrington, Joseph E, Jr, 1991. "The Determination of Price and Output Quotas in a Heterogeneous Cartel," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(4), pages 767-792, November.
    5. Alberto Salvo, 2010. "Inferring market power under the threat of entry: the case of the Brazilian cement industry," RAND Journal of Economics, RAND Corporation, vol. 41(2), pages 326-350, June.
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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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