Collusion Along the Learning Curve: Theory and Evidence From the Semiconductor Industry

Danial Asmat

Journal of Industrial Economics, 2021, vol. 69, issue 1, 83-108

Abstract: I study the effectiveness of collusion during an international cartel in DRAM, a type of semiconductor characterized by learning‐by‐doing and multiproduct competition. First, by exploiting time and firm‐level variation in cartel activity, I estimate that cartel participants cut output more on the oldest product generation than on newer generations. This is consistent with a hypothesis that higher learning rates in newer generations make defection from collusive equilibria more attractive. Second, I formulate a test for defection from collusive equilibria in learning‐by‐doing industries. Third, I formalize these results in a theoretical framework and discuss implications for antitrust policy in high technology markets.

Date: 2021
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