IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/128115.html

Cartel Recidivism and Innovation Activity in the US

Author

Listed:
  • Fotis, Panagiotis
  • Polemis, Michael

Abstract

In this study, we present the first systematic evidence of the impact of cartel recidivism on innovation. Combining data from an international price-fixing cartel database with the structural characteristics of the US manufacturing sectors at the six-digit NAICS level, we analyze how cartel recidivists influence subsequent innovation outcomes. Using a staggered difference-in-differences (DiD) framework for 110 US cartel cases over the period 1979-2016 and a novel heterogeneous estimator, we find that cartel recidivists lead to a significant and sustained decline in innovation progress. We argue that cartel recidivists, rather than single offenders, drive the negative impact of collusion on innovation. The results of this study are vigorous to several robustness tests, justifying the absence of pretreatment effects and endogeneity.

Suggested Citation

  • Fotis, Panagiotis & Polemis, Michael, 2026. "Cartel Recidivism and Innovation Activity in the US," MPRA Paper 128115, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:128115
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/128115/1/MPRA_paper_128115.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jeffrey T. Macher & Nathan H. Miller & Matthew Osborne, 2021. "Finding Mr. Schumpeter: technology adoption in the cement industry," RAND Journal of Economics, RAND Corporation, vol. 52(1), pages 78-99, March.
    2. Catarina Marvão & Giancarlo Spagnolo, 2023. "Leniency Inflation, Cartel Damages, and Criminalization," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 63(2), pages 155-186, September.
    3. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    4. Margaret C. Levenstein & Valerie Y. Suslow, 2006. "What Determines Cartel Success?," Journal of Economic Literature, American Economic Association, vol. 44(1), pages 43-95, March.
    5. Glenn C. Loury, 1979. "Market Structure and Innovation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(3), pages 395-410.
    6. Oxley, Joanne E, 1997. "Appropriability Hazards and Governance in Strategic Alliances: A Transaction Cost Approach," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 13(2), pages 387-409, October.
    7. Bacchiega Emanuele & Lambertini Luca & Mantovani Andrea, 2010. "R&D-Hindering Collusion," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-15, July.
    8. John Hagedoorn & Geert Duysters, 2002. "External Sources of Innovative Capabilities: The Preferences for Strategic Alliances or Mergers and Acquisitions," Journal of Management Studies, Wiley Blackwell, vol. 39(2), pages 167-188, March.
    9. Greenhalgh, Christine & Rogers, Mark, 2006. "The value of innovation: The interaction of competition, R&D and IP," Research Policy, Elsevier, vol. 35(4), pages 562-580, May.
    10. Drew Fudenberg & Jean Tirole, 1985. "Preemption and Rent Equalization in the Adoption of New Technology," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(3), pages 383-401.
    11. George Symeonidis, 2002. "The Effects of Competition: Cartel Policy and the Evolution of Strategy and Structure in British Industry," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262194686, December.
    12. Christos Genakos & Pantelis Koutroumpis & Mario Pagliero, 2018. "The Impact of Maximum Markup Regulation on Prices," Journal of Industrial Economics, Wiley Blackwell, vol. 66(2), pages 239-300, June.
    13. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 701-728.
    14. Arthur A. Bright & Jr. & W. Rupert Maclaurin, 1943. "Economic Factors Influencing the Development and Introduction of the Fluorescent Lamp," Journal of Political Economy, University of Chicago Press, vol. 51(5), pages 429-429.
    15. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    Full references (including those not matched with items on IDEAS)

    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. Hyo Kang, 2025. "Price-Fixing Cartels and Firm Innovation," Management Science, INFORMS, vol. 71(11), pages 9628-9649, November.
    2. Harabi, Najib, 1994. "Technischer Fortschritt in der Schweiz: Empirische Ergebnisse aus industrieökonomischer Sicht [Technischer Fortschritt in der Schweiz:Empirische Ergebnisse aus industrieökonomischer Sicht]," MPRA Paper 6725, University Library of Munich, Germany.
    3. Charles Bérubé & Marc Duhamel & Daniel Ershov, 2012. "Market Incentives for Business Innovation: Results from Canada," Journal of Industry, Competition and Trade, Springer, vol. 12(1), pages 47-65, March.
    4. Naudé, Wim, 2026. "To Infinity and Beyond! Anthropocentric Stories of Innovation and Growth," IZA Discussion Papers 18408, IZA Network @ LISER.
    5. Samuli Leppälä, 2015. "Economic Analysis Of Knowledge: The History Of Thought And The Central Themes," Journal of Economic Surveys, Wiley Blackwell, vol. 29(2), pages 263-286, April.
    6. Maria Elena Bontempi & Luca Lambertini & Giuseppe Parigi, 2024. "Exploring the innovative effort: duration models and heterogeneity," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 14(3), pages 587-656, September.
    7. Atal, Vidya & Bar, Talia & Gordon, Sidartha, 2016. "Project selection: Commitment and competition," Games and Economic Behavior, Elsevier, vol. 96(C), pages 30-48.
    8. Patrick Legros & Andrew F. Newman & Eugenio Proto, 2014. "Smithian Growth through Creative Organization," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 796-811, December.
    9. Kumar, Sanjesh & Singh, Baljeet, 2019. "Barriers to the international diffusion of technological innovations," Economic Modelling, Elsevier, vol. 82(C), pages 74-86.
    10. Lin, Ling & Xiao, Min & Yao, Rongrong & Zhang, Xiaoying, 2024. "Product market liberalization and corporate cash holdings: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 86(C).
    11. Julia Müller & Thorsten Upmann, 2026. "Returns to Scale and Strategic Regimes in Innovation Races," CESifo Working Paper Series 12552, CESifo.
    12. Krammer, Sorin M.S., 2022. "Human resource policies and firm innovation: The moderating effects of economic and institutional context," Technovation, Elsevier, vol. 110(C).
    13. Fanglin LI & Michael APPIAH & Regina Naa Amua DODOO, 2020. "The Effects Of Technology And Labor On Growth In Emerging Countries," Management Research and Practice, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 12(2), pages 39-47, June.
    14. Simachev, Yuri & Kuzyk, Mikhail & Ivanov, Denis, 2012. "Fostering innovation in Russian companies in the post-crisis period: Opportunities and constraints," MPRA Paper 41284, University Library of Munich, Germany.
    15. Im, Hyun Joong & Park, Young Joon & Shon, Janghoon, 2015. "Product market competition and the value of innovation: Evidence from US patent data," Economics Letters, Elsevier, vol. 137(C), pages 78-82.
    16. Stienstra, Miranda, 2020. "The determinants and performance implications of alliance partner acquisition," Other publications TiSEM 7fdee0c2-d4d2-4f5b-95e3-2, Tilburg University, School of Economics and Management.
    17. Tan, Ruipeng & Hou, Ke & Wu, Huaqing, 2025. "The cost of biodiversity protection: National Key Ecological Functional Zone and labor demand in China," Journal of Asian Economics, Elsevier, vol. 97(C).
    18. Thijssen, J.J.J., 2003. "Investment under uncertainty, market evolution and coalition spillovers in a game theoretic perspective," Other publications TiSEM 672073a6-492e-4621-8d4a-0, Tilburg University, School of Economics and Management.
    19. Zhang, Siyu & Huang, Yuexin & Luo, Danglun, 2026. "Industry regulation and firm innovation: Evidence from national centralized drug procurement policy in China," Economic Analysis and Policy, Elsevier, vol. 89(C), pages 421-441.
    20. Femminis Gianluca & Martini Gianmaria, 2010. "First-Mover Advantage in a Dynamic Duopoly with Spillover," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-46, November.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:pra:mprapa:128115. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.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.