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Anatomy of Cartel Contracts

Author

Listed:
  • Hyytinen, Ari

    () (University of Jyväskylã)

  • Steen, Frode

    () (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Toivanen, Otto

    () (K.U.Leuven)

Abstract

We study cartel contracts using data on 18 contract clauses of 109 legal Finnish manufacturing cartels. One third of the clauses relate to raising profits; the others deal with instability through incentive compatibility,cartel organization, or external threats. Cartels use three main approaches to raise profits: Price, market allocation, and specialization. These appear to be substitutes. Choosing one has implications on how cartels deal with instability. Simplifying, we find that large cartels agree on prices, cartels in homogenous goods industries allocate markets, and small cartels avoid competition through specialization.

Suggested Citation

  • Hyytinen, Ari & Steen, Frode & Toivanen, Otto, 2012. "Anatomy of Cartel Contracts," Discussion Paper Series in Economics 25/2012, Norwegian School of Economics, Department of Economics.
  • Handle: RePEc:hhs:nhheco:2012_025
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    Cited by:

    1. Koski, Heli & Pajarinen, Mika, 2013. "Empirical Evaluation of the Effectiveness of Competition Policy," ETLA Working Papers 15, The Research Institute of the Finnish Economy.
    2. Fink, Nikolaus & Frübing, Stefan, 2015. "Legal and illegal cartels in the European cement industry," ZEW Discussion Papers 15-066, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

    More about this item

    Keywords

    Cartels; contracts; antitrust; competition policy; industry heterogeneity.;

    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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