Membership, stability and internal institutions in European cartels

Havell, Richard (2015) Membership, stability and internal institutions in European cartels. Doctoral thesis, University of East Anglia.

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Abstract

The first topic this thesis examines is that of firms which enter and leave cartels without
affecting the existence of the cartel. The first chapter predicts which firms in markets
will choose to join and leave cartels. The findings align with a group of theoretical
models identified in the literature review, indicating that cartel membership is explained
by�firms' individual preferences for collusion, which are consistent over time. The firms
most likely to join and leave cartels are small firms in large cartels.
The second chapter questions what effect this behaviour by firms has on the survivability
of cartels. Theory is ambiguous on this, since entry and exit by firms could signal poor
discipline among cartelists which prevents the cartel from raising prices substantially due
to undercutting by outsiders or it could signal a structurally stable cartel which marginal firms take advantage of in their membership decisions. Cartels which experienced more
entry and exit by firms had a lower risk of breakdown in each period than cartels
with more static membership, indicating that member firms recognise when cartels are
strong and take advantage of this by constantly re-evaluating their membership decisions.
The�final chapter discusses a different topic: the types of agreement formed by cartels.
All cartels must agree to either �x prices, restrict the output of its members, allocate
exclusive territories, allocation customers, or rig bids in order to fulfil their objective
of raising member profits. Many cartels engage in more than one of these practices
simultaneously. Structural variables are poor at predicting the presence of agreement
types in the cartels studied, but distinct strategy pro�les where certain agreement types
substitute for each other or complement each other are present. These strategy profiles
appear to be associated with particular industries and cartels of common geographical
scope.

Item Type: Thesis (Doctoral)
Faculty \ School: Faculty of Social Sciences > School of Economics
Depositing User: Katie Miller
Date Deposited: 16 May 2017 08:56
Last Modified: 16 May 2017 08:56
URI: https://ueaeprints.uea.ac.uk/id/eprint/63530
DOI:

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