Theories of Cartel Stability and the Joint Executive Committee

Glenn Ellison ()

RAND Journal of Economics, 1994, vol. 25, issue 1, 37-57

Abstract: This article reexamines the experience of the Joint Executive Committee, an 1880s railroad cartel, to assess the applicability of the Green and Porter (1984) and Rotemberg and Saloner (1986) theories of price wars. After discussing necessary modifications to the theories, I estimate a number of dynamic models to explore the causes of price wars, the cyclical nature of pricing, and the possibility that secret price cuts may have been given. The estimates provide some support for the predictions of the first theory.

Date: 1994
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