IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Breaking Up Is Hard to Do: Determinants of Cartel Duration

  • Margaret C. Levenstein
  • Valerie Y. Suslow

We estimate the impact of cartel organizational features, as well as macroeconomic fluctuations and industry structure, on cartel duration using a data set of contemporary international cartels. We estimate a proportional hazards model with competing risks, distinguishing factors that increase the risk of “death by antitrust” from those that affect natural death, including defection, dissension, and entry. Our analysis indicates that the probability of cartel death from any cause increased significantly after 1995, when competition authorities expanded enforcement efforts toward international cartels. We find that fluctuations in firm-specific discount rates have a significant effect on cartel duration, whereas market interest rates do not. Cartels with a compensation scheme—a plan for how the cartel will handle variations in demand—are significantly less likely to break up. In contrast, retaliatory punishments in response to perceived cheating significantly increase the likelihood of natural death. Cartels that have to punish are not stable cartels.

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.

File URL: http://www.jstor.org/stable/pdfplus/10.1086/657660
Download Restriction: Access to the online full text or PDF requires a subscription.

File URL: http://www.jstor.org/stable/full/10.1086/657660
Download Restriction: Access to the online full text or PDF requires a subscription.

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.

Article provided by University of Chicago Press in its journal The Journal of Law and Economics.

Volume (Year): 54 (2011)
Issue (Month): 2 ()
Pages: 455 - 492

as
in new window

Handle: RePEc:ucp:jlawec:doi:10.1086/657660
Contact details of provider: Web page: http://www.journals.uchicago.edu/JLE/

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ucp:jlawec:doi:10.1086/657660. 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: (Journals Division)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.