The discontent cartel member and cartel collapse: The case of the German cement cartel

Joseph E. Harrington, Kai Hüschelrath, Ulrich Laitenberger and Florian Smuda
Authors registered in the RePEc Author Service: Kai Hueschelrath

No 14-084, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: We hypothesize a particular source of cartel instability and explore its relevance to understanding cartel dynamics. The cartel instability is rooted in the observation that, upon cartel formation, the relative positions of firms are often fixed which may lead some growthconscious members to be discontent. This incongruity between a cartel member's allocated market share and its desired market share may result in systematic deviations and the eventual collapse of the cartel. This hypothesis is then taken to the German cement cartel of 1991-2002. We argue that Readymix was such a discontent cartel member and, using a rich pricing data set, are able to characterize how Readymix deviated, how other firms responded, and how it led to the collapse of the cartel.

Keywords: collusion; cartel; antitrust enforcement; cement (search for similar items in EconPapers)
JEL-codes: K21 L41 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-com, nep-eur and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The discontent cartel member and cartel collapse: The case of the German cement cartel (2015)
Working Paper: The discontent cartel member and cartel collapse: The case of the German cement cartel (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:14084

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