Anatomy of Cartel Contracts

Frode Steen, Otto Toivanen and Ari Hyytinen

No 9362, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: 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.

Keywords: Antitrust; Cartels; Competition policy; Contracts; Industry heterogeneity (search for similar items in EconPapers)
JEL-codes: K12 L40 L41 (search for similar items in EconPapers)
Date: 2013-02
New Economics Papers: this item is included in nep-com, nep-hme, nep-ind and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: An Anatomy of Cartel Contracts (2019)
Working Paper: Anatomy of Cartel Contracts (2012)
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