IDEAS home Printed from https://ideas.repec.org/p/pae/wpaper/00-11.html
   My bibliography  Save this paper

Archer Daniels Midland:Price Fixer To The World

Author

Listed:
  • John M. Connor

    (Department of Agricultural Economics, College of Agriculture, Purdue University)

Abstract

Both market structure and corporate practices of Archer Daniels Midland fostered the implementation of the largest price-fixing conspiracies seen in modern times. The overcharges imposed on U.S. buyers of lysine and citric acid during 1994-1995 by ADM and its co-conspirators amounted to at least $250 million, and the total amount of public penalties, private damages, and legal costs exceeds $666 million. Perpetrators of price-fixing now face monetary exposures that are five times the amount of the harm caused to buyers. These events have spurred renewed attention by U.S. antitrust authorities in prosecuting international cartels.

Suggested Citation

  • John M. Connor, 2000. "Archer Daniels Midland:Price Fixer To The World," Working Papers 00-11, Purdue University, College of Agriculture, Department of Agricultural Economics.
    • Handle: RePEc:pae:wpaper:00-11
    as

    Download full text from publisher

    File URL: http://ageconsearch.umn.edu/bitstream/28664/1/sp00-11.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Matthew B. Krepps, 1997. "Another Look At The Impact Of The National Industrial Recovery Act On Cartel Formation And Maintenance Costs," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 151-154, February.
    2. Robert H. Porter, 1983. "A Study of Cartel Stability: The Joint Executive Committee, 1880-1886," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 301-314, Autumn.
    3. Glenn Ellison, 1994. "Theories of Cartel Stability and the Joint Executive Committee," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 37-57, Spring.
    4. Julio J. Rotemberg & Garth Saloner, 1989. "The Cyclical Behavior of Strategic Inventories," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(1), pages 73-97.
    5. Abreu, Dilip & Pearce, David & Stacchetti, Ennio, 1986. "Optimal cartel equilibria with imperfect monitoring," Journal of Economic Theory, Elsevier, vol. 39(1), pages 251-269, June.
    6. Rotemberg, Julio J & Saloner, Garth, 1987. "The Relative Rigidity of Monopoly Pricing," American Economic Review, American Economic Association, vol. 77(5), pages 917-926, December.
    7. John M. Connor, 1998. "The global citric acid conspiracy: Legal-economic lessons," Agribusiness, John Wiley & Sons, Ltd., vol. 14(6), pages 435-452.
    8. Lambertini, Luca, 1996. "Cartel Stability and the Curvature of Market Demand," Bulletin of Economic Research, Wiley Blackwell, vol. 48(4), pages 329-334, October.
    9. Rotemberg, Julio J & Saloner, Garth, 1986. "A Supergame-Theoretic Model of Price Wars during Booms," American Economic Review, American Economic Association, vol. 76(3), pages 390-407, June.
    10. Rothschild, R., 1999. "Cartel stability when costs are heterogeneous," International Journal of Industrial Organization, Elsevier, vol. 17(5), pages 717-734, July.
    11. Margaret Levenstein, 1993. "Vertical Restraints in the Bromine Cartel: The Role of Distributors in Facilitating Collusion," NBER Historical Working Papers 0049, National Bureau of Economic Research, Inc.
    12. Morten Hviid, 1992. "Endogenous Cartel Formation with Private Information," Canadian Journal of Economics, Canadian Economics Association, vol. 25(4), pages 972-982, November.
    13. Schmitt, Nicolas & Weder, Rolf, 1998. "Sunk costs and cartel formation: Theory and application to the dyestuff industry," Journal of Economic Behavior & Organization, Elsevier, vol. 36(2), pages 197-220, August.
    14. Rotemberg, Julio J & Saloner, Garth, 1990. "Collusive Price Leadership," Journal of Industrial Economics, Wiley Blackwell, vol. 39(1), pages 93-111, September.
    15. Rachael Goodhue, 1998. "Sustaining Collusion Via a Fuzzy Trigger," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 13(3), pages 333-345, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sylwester Bejger, 2015. "Screening for competition failures: some remarks on horizontal anticompetitive behavior visual detection," Ekonomia i Prawo, Uniwersytet Mikolaja Kopernika, vol. 14(2), pages 169-188, June.
    2. Bolotova, Yuliya & Connor, John M. & Miller, Douglas J., 2008. "The impact of collusion on price behavior: Empirical results from two recent cases," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1290-1307, November.
    3. John Connor, 2001. "Preface – Forensic Economics in Action: The Lysine Cartel," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 18(1), pages 1-4, February.
    4. Böcker, A. & Herrmann, R., 2001. "Internationale Kartelle in der Ernährungswirtschaft und die Möglichkeit der neuen Industrieökonomie zur Festlegung von Kollusion," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 37.
    5. John M. Connor, 1998. "The global citric acid conspiracy: Legal-economic lessons," Agribusiness, John Wiley & Sons, Ltd., vol. 14(6), pages 435-452.
    6. Hans W. Friederiszick & Frank P. Maier-Rigaud, 2008. "Triggering Inspections Ex Officio: Moving Beyond A Passive Eu Cartel Policy," Journal of Competition Law and Economics, Oxford University Press, vol. 4(1), pages 89-113.
    7. de Roos, Nicolas, 2006. "Examining models of collusion: The market for lysine," International Journal of Industrial Organization, Elsevier, vol. 24(6), pages 1083-1107, November.
    8. C. Taylor, 2001. "Indirect Damages from Price Fixing: The Alabama Lysine Case," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 18(1), pages 33-43, February.
    9. Sylwester Bejger & Joanna Bruzda, 2011. "Detection of Collusion Equilibrium in an Industry with Application of Wavelet Analysis," Dynamic Econometric Models, Uniwersytet Mikolaja Kopernika, vol. 11, pages 155-170.
    10. Catherine ROUX & Thomas VON UNGERN-STERNBERG, 2007. "Leniency Programs in a Multimarket Setting: Amnesty Plus and Penalty Plus," Cahiers de Recherches Economiques du Département d'économie 07.03, Université de Lausanne, Faculté des HEC, Département d’économie.
    11. Joseph E. Harrington, 2004. "Post‐Cartel Pricing During Litigation," Journal of Industrial Economics, Wiley Blackwell, vol. 52(4), pages 517-533, December.
    12. John M. Connor, 2003. "Private International Cartels: Effectiveness, Welfare, and Anticartel Enforcement," Working Papers 03-12, Purdue University, College of Agriculture, Department of Agricultural Economics.
    13. Connor, John M., 2002. "THE FOOD AND AGRICULTURAL GLOBAL CARTELS OF THE 1990s: OVERVIEW AND UPDATE," Staff Papers 28631, Purdue University, Department of Agricultural Economics.
    14. Lawrence White, 2001. "Lysine and Price Fixing: How Long? How Severe?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 18(1), pages 23-31, February.
    15. John Connor, 2001. "“Our Customers Are Our Enemies”: The Lysine Cartel of 1992–1995," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 18(1), pages 5-21, February.
    16. Fagart, Thomas, 2022. "Collusion in capacity under irreversible investment," International Journal of Industrial Organization, Elsevier, vol. 81(C).
    17. Sylwester Bejger, 2009. "Econometric Tools for Detection of Collusion Equilibrium in the Industry," Dynamic Econometric Models, Uniwersytet Mikolaja Kopernika, vol. 9, pages 27-38.
    18. John M. Connor, 2008. "Forensic Economics: An Introduction With Special Emphasis On Price Fixing," Journal of Competition Law and Economics, Oxford University Press, vol. 4(1), pages 31-59.
    19. de Roos, Nicolas, 2004. "A model of collusion timing," International Journal of Industrial Organization, Elsevier, vol. 22(3), pages 351-387, March.
    20. Marcel Boyer & Rachidi Kotchoni, 2011. "The Econometrics of Cartel Overcharges," CIRANO Working Papers 2011s-35, CIRANO.
    21. Hoekman, Bernard & Martin, Will, 2012. "Reducing distortions in international commodity markets : an agenda for multilateral cooperation," Policy Research Working Paper Series 5928, The World Bank.
    22. Bejger, Sylwester, 2010. "Collusion and seasonality of market price - A case of fixed market shares," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 2(2), pages 1-12, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Margaret C. Levenstein & Valerie Y. Suslow, 2002. "What Determines Cartel Success?," UMASS Amherst Economics Working Papers 2002-01, University of Massachusetts Amherst, Department of Economics.
    2. Connor, John M., 2003. "Private International Cartels: Effectiveness, Welfare, And Anticartel Enforcement," Staff Papers 28645, Purdue University, Department of Agricultural Economics.
    3. Kaplow, Louis & Shapiro, Carl, 2007. "Antitrust," Handbook of Law and Economics, in: A. Mitchell Polinsky & Steven Shavell (ed.), Handbook of Law and Economics, edition 1, volume 2, chapter 15, pages 1073-1225, Elsevier.
    4. Stenborg, Markku, 2002. "Economics of Joint Dominance," Discussion Papers 834, The Research Institute of the Finnish Economy.
    5. Chaim Fershtman & Ariel Pakes, 2000. "A Dynamic Oligopoly with Collusion and Price Wars," RAND Journal of Economics, The RAND Corporation, vol. 31(2), pages 207-236, Summer.
    6. Robert Gagné & Simon van Norden & Bruno Versaevel, 2003. "Testing Optimal Punishment Mechanisms Under Price Regulation: the Case of the Retail Market for Gasoline," CIRANO Working Papers 2003s-57, CIRANO.
    7. Gerlach, Heiko, 2009. "Stochastic market sharing, partial communication and collusion," International Journal of Industrial Organization, Elsevier, vol. 27(6), pages 655-666, November.
    8. Luis Orea & Jevgenijs Steinbuks, 2018. "Estimating Market Power In Homogenous Product Markets Using A Composed Error Model: Application To The California Electricity Market," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 1296-1321, April.
    9. Bolotova, Yuliya & Connor, John M. & Miller, Douglas J., 2008. "The impact of collusion on price behavior: Empirical results from two recent cases," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1290-1307, November.
    10. Labrecciosa Paola & Colombo Luca, 2010. "Technology Uncertainty and Market Collusion," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-17, March.
    11. Zhang, Yahua & Round, David K., 2011. "Price wars and price collusion in China's airline markets," International Journal of Industrial Organization, Elsevier, vol. 29(4), pages 361-372, July.
    12. de Roos, Nicolas, 2004. "A model of collusion timing," International Journal of Industrial Organization, Elsevier, vol. 22(3), pages 351-387, March.
    13. Adam Rosen, 2007. "Identification and estimation of firms' marginal cost functions with incomplete knowledge of strategic behavior," CeMMAP working papers CWP03/07, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    14. Panayiotis Agisilaou, 2013. "Collusion in Industrial Economics and Optimally Designed Leniency Programmes - A Survey," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2013-03, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    15. Luke Garrod & Matthew Olczak, 2017. "Collusion Under Imperfect Monitoring with Asymmetric Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 65(3), pages 654-682, September.
    16. Dae‐Wook Kim & Christopher R. Knittel, 2006. "Biases In Static Oligopoly Models? Evidence From The California Electricity Market," Journal of Industrial Economics, Wiley Blackwell, vol. 54(4), pages 451-470, December.
    17. Pedro Mendi & Róbert F. Veszteg, 2009. "Sustainability of collusion: evidence from the late 19th century basque iron and steel industry," Investigaciones Economicas, Fundación SEPI, vol. 33(3), pages 385-405, September.
    18. Margaret Levenstein, 1993. "Vertical Restraints in the Bromine Cartel: The Role of Distributors in Facilitating Collusion," NBER Historical Working Papers 0049, National Bureau of Economic Research, Inc.
    19. Matthew Weinberg & Gloria Sheu & Nathan Miller, 2019. "Oligopolistic Price Leadership and Mergers: An Empirical Model of the U.S. Beer Industry," 2019 Meeting Papers 1210, Society for Economic Dynamics.
    20. Posada, P., 2000. "Cartel Stability and Product Differentiation: How Much Do the Size of the Cartel and the Size of the Industry Matter?," The Warwick Economics Research Paper Series (TWERPS) 556, University of Warwick, Department of Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pae:wpaper:00-11. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Debby Weber (email available below). General contact details of provider: https://edirc.repec.org/data/dapurus.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.