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Polycentric governance in collusive agreements

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  • Schmal, Wolfgang Benedikt

Abstract

Collusive agreements in the form of cartels among firms are complex structures. The involved firms need to agree on prices and sales quotas that are legally not enforceable. Market characteristics that foster cartels' failure or success are widely examined. However, the interplay between the involved firms in a collusive agreement, i.e., the governance dimension within a cartel, has received surprisingly low attention. Using a comprehensive dataset of 191 cartels from 2012 - 2018, this paper empirically reveals that polycentric structures within the cartel governance may contribute to longer duration and lower sanctions imposed by competition authorities, especially for large cartels. By that, the paper sheds new light on two aspects: The entangled governance structures of collusive undertakings as well as the relevance of polycentricity in the firm environment. The insights may be helpful for cartel authorities and new research combining institutional and industrial economics.

Suggested Citation

  • Schmal, Wolfgang Benedikt, 2024. "Polycentric governance in collusive agreements," Freiburg Discussion Papers on Constitutional Economics 24/1, Walter Eucken Institut e.V..
    • Handle: RePEc:zbw:aluord:284409
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    More about this item

    Keywords

    Collusion; illegal cartels; polycentricity; governance; institutions;
    All these keywords.

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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