Hub and Spoke Cartels: Theory and Evidence from the Grocery Industry

Robert Clark, Ignatius Horstmann and Jean-François Houde

No 29253, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Numerous recently uncovered cartels operated along the supply chain, with firms at one end facilitating collusion at the other – hub-and-spoke arrangements. These cartels are hard to rationalize because they induce double marginalization and higher costs. We examine Canada’s alleged bread cartel and provide the first comprehensive analysis of hub-and-spoke collusion. We make three contributions: i) Using court documents and pricing data we provide evidence that collusion existed at both ends of the supply chain, ii) we show that collusion was effective, increasing inflation by about 40% and iii) we provide a model explaining why this form of collusion arose.

JEL-codes: L1 L4 L41 L42 (search for similar items in EconPapers)
Date: 2021-09
New Economics Papers: this item is included in nep-com, nep-ind, nep-isf, nep-ore and nep-reg
Note: IO
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Citations: View citations in EconPapers (2)

Published as Robert Clark & Ig Horstmann & Jean-François Houde, 2024. "Hub-and-Spoke Cartels: Theory and Evidence from the Grocery Industry," American Economic Review, vol 114(3), pages 783-814.

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Working Paper: Hub-and-spoke cartels: Theory and evidence from the grocery industry (2021)
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