Measuring the Incentive to Collude: The Vitamin Cartels, 1990–99

Mitsuru Igami and Takuo Sugaya

The Review of Economic Studies, 2022, vol. 89, issue 3, 1460-1494

Abstract: Do mergers help or hinder collusion? This article studies the stability of the vitamin cartels in the 1990s and presents a repeated-games approach to quantify “coordinated effects” of a merger. We use data and direct evidence from American courts and European agencies to show the collusive incentive of the short-lived vitamin C cartel was likely to be negative when it actually collapsed in 1995, whereas the incentives of the long-lived cartels (vitamins A and E, and beta carotene) were unambiguously positive until the prosecution in 1999. Simulations suggest some mergers could have prolonged the vitamin C cartel, but others could have further destabilized it, because both the direction and magnitude of coordinated effects depend not only on the number of firms but also on their cost asymmetry.

Keywords: Antitrust; Cartel; Collusion; Coordinated effect; Merger; Repeated game; D43; L13; L41 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:89:y:2022:i:3:p:1460-1494.

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