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An Anatomy of Cartel Contracts

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  • Ari Hyytinen
  • Frode Steen
  • Otto Toivanen

Abstract

We study the contracts of 898 legal Finnish cartels. Cartels that exclusively allocate markets, either geographically or in the product/production space, are dominant in manufacturing. They are often bilateral and include a vertical dimension. Structural industry characteristics predict the type of a cartel, e.g., consistent with theory, quota cartels are more common in manufacturing and when buyers are primarily industrial. The contracts of quota cartels include more (governance) clauses. Pure pricing cartels are the dominant cartel type in non-manufacturing and are more common when demand is primarily from retail buyers. Pricing cartels are larger than other types of cartels.

Suggested Citation

  • Ari Hyytinen & Frode Steen & Otto Toivanen, 2019. "An Anatomy of Cartel Contracts," Economic Journal, Royal Economic Society, vol. 129(621), pages 2155-2191.
  • Handle: RePEc:oup:econjl:v:129:y:2019:i:621:p:2155-2191.
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    File URL: http://hdl.handle.net/10.1111/ecoj.12633
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    3. Koski, Heli & Pajarinen, Mika, 2013. "Empirical Evaluation of the Effectiveness of Competition Policy," ETLA Working Papers 15, The Research Institute of the Finnish Economy.
    4. Andreas Freitag & Catherine Roux & Christian Thöni, 2021. "Communication And Market Sharing: An Experiment On The Exchange Of Soft And Hard Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(1), pages 175-198, February.
    5. Andrei Y. Shastitko & Svetlana V. Golovanova, 2014. "Collusion in markets characterized by one large buyer: lessons learned from an antitrust case in Russia," HSE Working papers WP BRP 49/EC/2014, National Research University Higher School of Economics.
    6. González, Xulia & Moral, María J., 2019. "Effects of antitrust prosecution on retail fuel prices," International Journal of Industrial Organization, Elsevier, vol. 67(C).
    7. Andres, Maximilian & Bruttel, Lisa & Friedrichsen, Jana, 2021. "How do sanctions work? The choice between cartel formation and tacit collusion," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242372, Verein für Socialpolitik / German Economic Association.
    8. Martin, Simon & Schmal, W. Benedikt, 2021. "Collusive compensation schemes aided by algorithms," DICE Discussion Papers 375, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    9. Filomena Garcia & Jose Manuel Paz y Miño & Gustavo Torrens, 2020. "The merger paradox, collusion, and competition policy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(6), pages 2051-2081, December.
    10. Fink, Nikolaus & Frübing, Stefan, 2015. "Legal and illegal cartels in the European cement industry," ZEW Discussion Papers 15-066, ZEW - Leibniz Centre for European Economic Research.

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    More about this item

    JEL classification:

    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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