Cartel success and institutions. The Finnish Cotton Cartel, 1903-1939

Mika Kallioinen

Business History, 2015, vol. 57, issue 4, 512-527

Abstract: This article uses institutional theory to interpret collusive behaviour in the pre-World War II cotton cartel in Finland. The findings do not support the optimistic view of the institutionalists about the efficiency of economic institutions in boosting cooperation. Only one (the conciliation mechanism) of the four institutions identified in the cotton cartel could check opportunism to a certain degree, although it too lacked effective enforcement characteristics. This article argues that, in cartels, the motivation to follow institutions is fundamentally different from other environments, particularly trade. Besides institutions, organisational solutions, such as a sales agency that removes individual firms' discretion over pricing decisions, are needed to enhance cartel stability.

Date: 2015
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DOI: 10.1080/00076791.2014.929114

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