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Hub-and-spoke cartels: Theory and evidence from the grocery industry

Robert Clark (), Ig Horstmann and Jean-Francois Houde ()
Additional contact information
Ig Horstmann: Rotman School of Management
Jean-Francois Houde: University of Wisconsin-Madison and NBER

No 1473, Working Paper from Economics Department, Queen's University

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 evidencethat 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.

Keywords: antitrust; vertical collusion; grocery industry (search for similar items in EconPapers)
JEL-codes: D22 L12 L13 L41 L44 L66 (search for similar items in EconPapers)
Pages: 68 pages
Date: 2021-09
New Economics Papers: this item is included in nep-com, nep-law, nep-ore and nep-reg
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Downloads: (external link) First version 2021 (application/pdf)

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