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The South African Wheat Flour Cartel: Overcharges at the Mill

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  • Liberty Mncube

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Abstract

This paper analyses the South African flour cartel, active from 1999 to 2007 and provides an overcharge estimation by using comparator based methods. The empirical analysis is complemented by a descriptive overview of the history and structure of the South African flour industry. The flour cartel fixed the price of flour and allocated customers from 1999 to 2007. We find that the overcharges to independent bakeries range from 7 % to 42 %. We also show that the cartel profits were approximately two times higher during the cartel than the price war year 2002 or the post collusion year 2008. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Liberty Mncube, 2014. "The South African Wheat Flour Cartel: Overcharges at the Mill," Journal of Industry, Competition and Trade, Springer, vol. 14(4), pages 487-509, December.
  • Handle: RePEc:kap:jincot:v:14:y:2014:i:4:p:487-509
    DOI: 10.1007/s10842-013-0172-y
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    References listed on IDEAS

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    Cited by:

    1. World Bank Group, 2016. "South Africa Economic Update, February 2016," World Bank Other Operational Studies 23762, The World Bank.
    2. Willem H. Boshoff, 2015. "Illegal Cartel Overcharges in Markets with a Legal Cartel History: Bitumen Prices in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 83(2), pages 220-239, June.

    More about this item

    Keywords

    Competition policy; Cartels; Overcharges; L13; L40; L41; L66;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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