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

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

Abstract

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

Topics: 330 Wirtschaft
Year: 2014
OAI identifier: oai:ub-madoc.bib.uni-mannheim.de:37306

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