IDEAS home Printed from https://ideas.repec.org/p/zbw/zewdip/17002.html
   My bibliography  Save this paper

When do firms leave cartels? Determinants and the impact on cartel survival

Author

Listed:
  • Hellwig, Michael
  • Hüschelrath, Kai

Abstract

We use a dataset of 615 firms which participated in 114 illegal cartels - convicted by the European Commission between 1999 and 2016 - to investigate the determinants of the duration of a firm's participation in a cartel. Applying a Weibull proportional hazard model with a particular focus on the impact of internal and external time-varying determinants, we find that firms show an increased probability to leave a cartel if prior exits occurred as well as in periods of high demand growth. However, we find a reduced exit probability in situations of prior entries to the cartel or in periods of high interest rates. Additional estimations on the cartel level further suggest that firm exits increase the probability of a cartel breakdown substantially.

Suggested Citation

  • Hellwig, Michael & Hüschelrath, Kai, 2017. "When do firms leave cartels? Determinants and the impact on cartel survival," ZEW Discussion Papers 17-002, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:17002
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/148923/1/876457243.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Oindrila De, 2010. "Analysis of Cartel Duration: Evidence from EC Prosecuted Cartels," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 17(1), pages 33-65.
    2. Green, Edward J & Porter, Robert H, 1984. "Noncooperative Collusion under Imperfect Price Information," Econometrica, Econometric Society, vol. 52(1), pages 87-100, January.
    3. Gerard J. van den Berg & Bettina Drepper, 2016. "Inference for Shared-Frailty Survival Models with Left-Truncated Data," Econometric Reviews, Taylor & Francis Journals, vol. 35(6), pages 1075-1098, June.
    4. Joseph E. Harrington, Jr, 2006. "How Do Cartels Operate?," Economics Working Paper Archive 531, The Johns Hopkins University,Department of Economics.
    5. Margaret C. Levenstein & Valerie Y. Suslow, 2011. "Breaking Up Is Hard to Do: Determinants of Cartel Duration," Journal of Law and Economics, University of Chicago Press, vol. 54(2), pages 455-492.
    6. Dick, Andrew R, 1996. "When Are Cartels Stable Contracts?," Journal of Law and Economics, University of Chicago Press, vol. 39(1), pages 241-283, April.
    7. H. Peter Boswijk & Maurice J.G. Bun & Maarten Pieter Schinkel, 2016. "Cartel Dating," Tinbergen Institute Discussion Papers 16-092/VII, Tinbergen Institute.
    8. Mario Cleves & William W. Gould & Roberto G. Gutierrez & Yulia Marchenko, 2010. "An Introduction to Survival Analysis Using Stata," Stata Press books, StataCorp LP, edition 3, number saus3, April.
    9. Valerie Y. Suslow, 2005. "Cartel contract duration: empirical evidence from inter-war international cartels," Industrial and Corporate Change, Oxford University Press, vol. 14(5), pages 705-744, October.
    10. Posner, Richard A, 1970. "A Statistical Study of Antitrust Enforcement," Journal of Law and Economics, University of Chicago Press, vol. 13(2), pages 365-419, October.
    11. Harrington, Joseph E., 2006. "How Do Cartels Operate?," Foundations and Trends(R) in Microeconomics, now publishers, vol. 2(1), pages 1-105, August.
    12. Lancaster, Tony, 1979. "Econometric Methods for the Duration of Unemployment," Econometrica, Econometric Society, vol. 47(4), pages 939-956, July.
    13. Jean Tirole & Marc Ivaldi & Patrick Rey & Paul Seabright, 2007. "The Economics of Tacit Collusion : Implications for Merger Control," Post-Print hal-00173200, HAL.
    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. Heim, Sven & Hüschelrath, Kai & Laitenberger, Ulrich & Spiegel, Yossi, 2017. "Minority share acquisitions and collusion: Evidence from the introduction of national leniency programs," ZEW Discussion Papers 17-037, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

    More about this item

    Keywords

    Survival Analysis; Cartels; Duration; European Union;

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

    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:zbw:zewdip:17002. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics). General contact details of provider: http://edirc.repec.org/data/zemande.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.