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The discontent cartel member and cartel collapse: The case of the German cement cartel

Author

Listed:
  • Joseph Harrington
  • Kai Hüschelrath

    (Centre for European Economic Research (Mannheim, Germany) - Zentrum für Europäische Wirtschaftsforschung (ZEW) - University of Mannheim = Universität Mannheim)

  • Ulrich Laitenberger

    (Centre for European Economic Research (Mannheim, Germany) - Zentrum für Europäische Wirtschaftsforschung (ZEW) - University of Mannheim = Universität Mannheim, SES - Département Sciences Economiques et Sociales - Télécom Paris - IMT - Institut Mines-Télécom [Paris] - IP Paris - Institut Polytechnique de Paris, ECOGE - Economie Gestion - I3 SES - Institut interdisciplinaire de l’innovation de Telecom Paris - Télécom Paris - IMT - Institut Mines-Télécom [Paris] - IP Paris - Institut Polytechnique de Paris - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

  • Florian Smuda

    (Centre for European Economic Research (Mannheim, Germany) - Zentrum für Europäische Wirtschaftsforschung (ZEW) - University of Mannheim = Universität Mannheim)

Abstract

We hypothesize a particular source of cartel instability and explore its relevance to understanding cartel dynamics. The cartel instability is rooted in the observation that, upon cartel formation, the relative positions of firms are often fixed which may lead some growth-conscious members to be discontent. This incongruity between a cartel member's allocated market share and its desired market share may result in systematic deviations and the eventual collapse of the cartel. This hypothesis is then taken to the German cement cartel of 1991–2002. We argue that Readymix was such a discontent cartel member and, using a rich pricing data set, are able to characterize how Readymix deviated, how other firms responded, and how it led to the collapse of the cartel.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Joseph Harrington & Kai Hüschelrath & Ulrich Laitenberger & Florian Smuda, 2015. "The discontent cartel member and cartel collapse: The case of the German cement cartel," Post-Print hal-02163723, HAL.
    • Handle: RePEc:hal:journl:hal-02163723
    DOI: 10.1016/j.ijindorg.2015.07.005
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    Cited by:

    1. Matthias Hunold & Kai Hüschelrath & Ulrich Laitenberger & Johannes Muthers, 2020. "Competition, Collusion, and Spatial Sales Patterns: Theory and Evidence," Journal of Industrial Economics, Wiley Blackwell, vol. 68(4), pages 737-779, December.
    2. Flavien Moreau & Ludovic Panon, 2023. "How costly are cartels?," Temi di discussione (Economic working papers) 1413, Bank of Italy, Economic Research and International Relations Area.
    3. Joseph E. Harrington & Kai Hüschelrath & Ulrich Laitenberger, 2018. "Rent sharing to control noncartel supply in the German cement market," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(1), pages 149-166, March.
    4. John S. Heywood & Dongyang Li & Guangliang Ye, 2021. "Spatial pricing and collusion," Metroeconomica, Wiley Blackwell, vol. 72(2), pages 425-440, May.
    5. Kai Andree & John S. Heywood & Mike Schwan & Zheng Wang, 2018. "A Spatial Model Of Cartel Stability: The Influence Of Production Cost Convexity," Bulletin of Economic Research, Wiley Blackwell, vol. 70(3), pages 298-311, July.
    6. Delina Agnosteva & Constantinos Syropoulos & Yoto Yotov, 2017. "Multimarket Linkages, Cartel Discipline and Trade Costs," School of Economics Working Paper Series 2017-12, LeBow College of Business, Drexel University.
    7. Justus Haucap & Christina Heldman, 2023. "On the sociology of cartels," European Journal of Law and Economics, Springer, vol. 56(2), pages 289-323, October.
    8. Swoboda, Sandra Maria, 2017. "Einfluss ausgewählter Determinanten auf die Kartellbildung und -stabilität: Eine Literaturstudie," Arbeitspapiere 176, University of Münster, Institute for Cooperatives.
    9. Yao, Dingjun & Yan, Kai, 2025. "Can factoring business alleviate the seasonal impact on agricultural supply chain enterprises?," International Review of Financial Analysis, Elsevier, vol. 98(C).
    10. Swoboda, Sandra Maria, 2018. "Market structure and cartel duration: Evidence from detected EU cartel cases," Arbeitspapiere 184, University of Münster, Institute for Cooperatives.
    11. Oleksandr Shcherbakov & Naoki Wakamori, 2017. "Identifying the Degree of Collusion Under Proportional Reduction," Staff Working Papers 17-51, Bank of Canada.
    12. Paulo Burnier da Silveira, 2025. "The Determinants of Cartel Duration in Brazil," EconomiX Working Papers 2025-18, University of Paris Nanterre, EconomiX.
    13. 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.

    More about this item

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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