How Cartels Endure and How They Fail

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How Cartels Endure and How They Fail

Studies of Industrial Collusion

9781858988306 Edward Elgar Publishing
Edited by Peter Z. Grossman, Clarence Efroymson Chair in Economics, Butler University, US
Publication Date: 2004 ISBN: 978 1 85898 830 6 Extent: 336 pp
Why do some cartels fail and others succeed? This question has intrigued economists for a hundred years, and they have created an extensive body of theory to help explain cartel behaviour. This book looks at the experience of actual cartels and challenges their portrayal as found in the existing literature.

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Why do some cartels fail and others succeed? This question has intrigued economists for a hundred years, and they have created an extensive body of theory to help explain cartel behaviour. This book looks at the experience of actual cartels and challenges their portrayal as found in the existing literature.

The eleven chapters by leading researchers of industrial organization study real examples of industrial collusion. The authors investigate the formation, behaviour, activity and purpose of cartels, and illustrate the intricacies of collusive relationships. In the process they question the existing economic theory surrounding the operation of cartels, which in practice do not always adhere to the textbook models or to complex game theoretic rules. Although much economic research suggests that cartels are doomed to failure, the authors find that there are many examples of industries where cartels have succeeded in controlling prices and output over a prolonged period of time.

This book is a groundbreaking attempt to study empirically a range of cartels throughout the world, providing both historical and contemporary examples of collusion to enrich the arguments. Academics, policymakers, lawyers and economists working in the fields of industrial organization and competition policy will find this to be a highly original and thought-provoking volume.
Critical Acclaim
‘The book is indispensable reading for economic historians, policymakers, and economists, including those committed to the free market ideal.’
– Kwan Man Bun, Enterprise & Society

‘The volume . . . includes fine chapters on research joint ventures, collusion in declining industries and government policy toward cartels in Japan. Taken as a whole, the book provides fascinating insights, calls into question some traditional views, and points the way for future research. It is an extremely valuable contribution to the study of cartels.’
– Richard Sicotte, EH.NET

‘This book is about one of the most elusive problems in industrial organization – why some collusive agreements flourish while others fail. It brings together, in one place, much of the best recent work in the literature on this topic. I think the book will become a staple of reading lists for graduate industrial organization courses, and it will be invaluable for antitrust lawyers and policymakers.’
– Sam Peltzman, University of Chicago, US
Contributors
Contributors: G. Bittlingmayer, A.R. Dick, C.L. Gilbert, P.Z. Grossman, Y. Jang, J.R. Kinghorn, M.C. Levenstein, G.D. Libecap, R. Nielsen, P. Simpson, W. Sjostrom, J.L. Smith, V.Y. Suslow, M. Tilton, N.S. Vonortas
Contents
Contents: Introduction: What Do We Mean by Cartel Success? 1. Studies of Cartel Stability: A Comparison of Methodological Approaches 2. Decreasing Average Cost and Competition: A New Look at the Addyston Pipe Case 3. The Stability of Ocean Shipping Cartels 4. Why One Cartel Fails and Another Endures: The Joint Executive Committee and the Railroad Express 5. A Practice without Defenders: The Price Effects of Cartelization 6. If Cartels Were Legal, When Would Firms Fix Prices? 7. The Difference Government Policy Makes: The Case of Japan 8. Political Constraints on Government Cartelization: The Case of Oil Production Regulation in Texas and Saudi Arabia 9. International Commodity Agreements as Internationally Sanctioned Cartels 10. Response to Decline in the Western European Synthetic Fibre Industry: An Investigation of a Crisis Cartel 11. Collaborate to Collude? Multimarket and Multiproject Contact in R&D Index
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