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The Inner Workings of a Hub-and-Spoke Caretl in the Automotive Fuel Industry

Daniel Chaves () and Marco Duarte

No 20216, University of Western Ontario, Departmental Research Report Series from University of Western Ontario, Department of Economics

Abstract: We analyze a hub-and-spoke cartel in the Brazilian automotivefuel industry. Using the court documents and detailed data on the supply chain we uncover three mechanisms beyond information sharing used by wholesalers (hub) to help retailers (spokes) solve the obstacles of price coordination: vertical transfers across asymmetric spokes; subsidies during punishment; and cost stabilization. We argue that wholesalers benefited from the cartel by being the exclusive supplier during the scheme. We use the synthetic control approach to quantify how successful the cartel was in increasing markups. We find that not only retailers, but wholesalers benefited from the cartel.

Keywords: antitrust; Hub-and-Spoke collusion; vertical restraints (search for similar items in EconPapers)
JEL-codes: D43 K21 L12 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-com, nep-ene, nep-ind, nep-law and nep-reg
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