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


Harrington Jr., Joseph E. ; Hüschelrath, Kai ; Laitenberger, Ulrich ; Smuda, Florian


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URL: https://ub-madoc.bib.uni-mannheim.de/37306
URN: urn:nbn:de:bsz:180-madoc-373060
Document Type: Working paper
Year of publication: 2014
The title of a journal, publication series: ZEW Discussion Papers
Volume: 14-084
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: L41 , K21,
Keywords (English): Collusion , cartel , antitrust enforcement , cement
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.

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Harrington Jr., Joseph E. ; Hüschelrath, Kai ; Laitenberger, Ulrich ; Smuda, Florian (2014) The discontent cartel member and cartel collapse : the case of the German cement cartel. Open Access ZEW Discussion Papers Mannheim 14-084 [Working paper]
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