Search results for "Cartels"
showing 4 items of 4 documents
Anatomy of Cartel Contracts
2013
We study cartel contracts using data on 18 contract clauses of 109 legal Finnish manufacturing cartels. One third of the clauses relate to raising profits; the others deal with instability through incentive compatibility, cartel organization, or external threats. Cartels use three main approaches to raise profits: Price, market allocation, and specialization. These appear to be substitutes. Choosing one has implications on how cartels deal with instability. Simplifying, we find that large cartels agree on prices, cartels in homogenous goods industries allocate markets, and small cartels avoid competition through specialization.
Trade Associations: Why Not Cartels?
2021
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 accept…
Cartels Uncovered
2018
How many cartels are there? The answer is important in assessing the efficiency of competition policy. We present a Hidden Markov Model that answers the question, taking into account that often we do not know whether a cartel exists in an industry or not. Our model identifies key policy parameters from data generated under different competition policy regimes and may be used with time-series or panel data. We take the model to data from a period of legal cartels - Finnish manufacturing industries 1951 - 1990. Our estimates suggest that by the end of the period, almost all industries were cartelized.
Tackling Market Failure or Building a Cartel? Creation of an Investment Regulation System in Finnish Forest Industries
2015
Government intervention in the economy is often justified by the need to correct market failures. This study analyzes one case, the investments of Finnish forest industries, in which, in the late 1960s and early 1970s, both policy makers and the trade association representing the sector reasoned that intervention was particularly necessary because otherwise, the only substantial natural resource in the small country would be overexploited. In the long run, however, the growth of forest resources turned out to be higher, and the demand for wood lower, than expected. Furthermore, the most influential industrialists managed to “capture” the regulatory system and make it a component of their ne…