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Effects of different cartel policies: Evidence from the German power-cable industry


  • Normann, Hans-Theo
  • Tan, Elaine S.


We analyze the effects of cartel policies on firm behavior using data from the German power-cable cartel. Antitrust authorities affected the cartel under two different legal regimes: penalizing the cartel in some years, and exempting it for ten years from the general cartel prohibition. While penalties did not reduce prices or profits, making collusion legal raised profits by at least 16% each year, compared to the time when the illegal cartel was not prosecuted. The threat of penalties was sufficient to reduce profit from collusion. The intended efficiency gains from rationalization, which was the justification for legalizing the cartel, did not materialize.

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  • Normann, Hans-Theo & Tan, Elaine S., 2013. "Effects of different cartel policies: Evidence from the German power-cable industry," DICE Discussion Papers 108, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  • Handle: RePEc:zbw:dicedp:108

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    Cited by:

    1. Muthers, Johannes & Hunold, Matthias, 2017. "Capacity constrained price competition with transportation costs," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168248, Verein für Socialpolitik / German Economic Association.

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