6533b82cfe1ef96bd12900e2
RESEARCH PRODUCT
Trade Associations: Why Not Cartels?
Salvatore ModicaAndrea MattozziDavid K. Levinesubject
Economics and EconometricsStylized fact05 social sciencesCartelPrice elasticity of supplyCartelCompetition AuthorityCommon frameworkFree ridingCartels Labor Unions Lobbying Monitoring Costs Self-organizing Groups Special InterestsMarket economyIncentiveIf and only ifFirm0502 economics and businessEconomicsRelevance (law)050207 economicsSettore SECS-P/01 - Economia Politica050205 econometricsdescription
First published: 30 September 2020 The relevance of special interests lobbying in modern democracies can hardly be questioned. But if large trade associations can overcome the free riding problem and form effective lobbies, why do they not also threaten market competition by forming equally effective cartels? We argue that the key to understanding the difference lies in supply elasticity. The group discipline which works in the case of lobbying can be effective in sustaining a cartel only if increasing output is sufficiently costly ‐ otherwise the incentive to deviate is too great. The theory helps organizing a number of stylized facts within a common framework. This article has been accepted for publication and undergone full peer review but has not been through the copyediting, typesetting, pagination and proofreading process, which may lead to differences between this version and the Version of Record.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2021-01-01 |