Private Monitoring and Communication in Cartels: Explaining Recent Collusive Practices

Motivated by recent cartel practices, a stable collusive agreement is characterized when firms' prices and quantities are private information. Conditions are derived whereby an equilibrium exists in which firms truthfully report their sales and then make transfers within the cartel based on these reports. The properties of this equilibrium fit well with the cartel agreements in a number of markets including citric acid, lysine, and vitamins. (JEL D43, D82, K21, L12, L61, L65)

International Price-Fixing Cartels and Developing Countries: A Discussion of Effects and Policy Remedies

The U.S. Department of Justice, the European Commission, and the Organization for Economic Cooperation and Development have all recently voiced concern about international price- fixing cartels. The U.S. and European Union have increased prosecution of international cartels in the past decade, but very few developing countries have made similar enforcement efforts. If these cartels have significant effects on developing country consumers and producers, the lack of antitrust prosecutions by developing countries against these cartels is an important problem. Geographically limited prosecut ions may not provide sufficient disincentives to deter collusion that has worldwide benefits for colluding firms. Ongoing prosecutions of international cartels by industrialized countries may open up markets for entry by developing country producers, but these efforts may be undermined if cartels create durable barriers to entry. Western governments are also susceptible to manipulation by domestic producers using tariff barriers and anti- dumping duties to protect the home market, both during and after the price- fixing conspiracy. Thus, developing countries may need to develop their own antitrust laws and enforcement capabilities to help deter international cartel activity. A recent ruling of the Second Circuit Court of Appeals also opens up the possibility that developing country consumers may be able to exact remedies in U.S. courts. In this paper we examine the possible effects of private international cartels on developing countries by looking in detail at three recent cartel cases, as well as at a broader cross- section of forty- two recently prosecuted international cartels. We discuss the indirect effects on developing country producers, either as competitors or co- conspirators, as well the direct effects of cartels on developing country consumers. By combining trade data with a sample of US and European prosecutions of international cartels in the 1990s, we are able to make a first attempt at quantifying the order of magnitude of the consequences of these cartels on developing countries as consumers. In 1997, the latest year for which we have trade data, developing countries imported $54.7 billion of goods from a sub - sample of 19 industries that had seen a price- fixing conspiracy during the 1990s. These imports represented 5.2% of total imports and 1.2% of GDP in developing countries.http://deepblue.lib.umich.edu/bitstream/2027.42/39923/2/wp538.pd

International Price-Fixing Cartels and Developing Countries: A Discussion of Effects and Policy Remedies

We examine the possible effects of private international cartels on developing countries by looking in detail at three recent cartel cases, as well as at a broader cross-section of 42 recently prosecuted international cartels. We discuss the indirect effects on developing country producers, either as competitors or co-conspirators, as well the direct effects of cartels on developing country consumers. By combining trade data with a sample of US and European prosecutions of international cartels in the 1990s, we are able to estimate the order of magnitude of the consequences of these cartels on developing countries as consumers. In 1997, the latest year for which we have trade data, developing countries imported $54.7 billion of goods from a sub-sample of 19 industries that contained a price-fixing conspiracy during the 1990s. These imports represented 5.2% of total imports and 1.2% of GDP in developing countries.

International Price-Fixing Cartels and Developing Countries: A Discussion of Effects and Policy Remedies

The U.S. Department of Justice, the European Commission, and the Organization for Economic Cooperation and Development have all recently voiced concern about international price-fixing cartels. The U.S. and European Union have increased prosecution of international cartels in the past decade, but very few developing countries have made similar enforcement efforts. If these cartels have significant effects on developing country consumers and producers, the lack of antitrust prosecutions by developing countries against these cartels is an important problem. Geographically limited prosecutions may not provide sufficient disincentives to deter collusion that has worldwide benefits for colluding firms. Ongoing prosecutions of international cartels by industrialized countries may open up markets for entry by developing country producers, but these efforts may be undermined if cartels create durable barriers to entry. Western governments are also susceptible to manipulation by domestic producers using tariff barriers and anti-dumping duties to protect the home market, both during and after the price-fixing conspiracy. Thus, developing countries may need to develop their own antitrust laws and enforcement capabilities to help deter international cartel activity. A recent ruling of the Second Circuit Court of Appeals also opens up the possibility that developing country consumers may be able to exact remedies in U.S. courts. In this paper we examine the possible effects of private international cartels on developing countries by looking in detail at three recent cartel cases, as well as at a broader cross-section of forty-two recently prosecuted international cartels. We discuss the indirect effects on developing country producers, either as competitors or co-conspirators, as well the direct effects of cartels on developing country consumers. By combining trade data with a sample of US and European prosecutions of international cartels in the 1990s, we are able to make a first attempt at quantifying the order of magnitude of the consequences of these cartels on developing countries as consumers. In 1997, the latest year for which we have trade data, developing countries imported $54.7 billion of goods from a sub-sample of 19 industries that had seen a price-fixing conspiracy during the 1990s. These imports represented 5.2% of total imports and 1.2% of GDP in developing countries.

International Cartel Enforcement: Lessons from the 1990s

The enforcement record of the 1990s has demonstrated that private international cartels are neither relics of the past nor do they always fall quickly under the weight of their own incentive problems. Of a sample of forty such cartels prosecuted by the United States and European Union in the 1990s, twenty-four lasted at least four years. And for the twenty cartels in this sample where sales data are available, the annual worldwide turnover in the affected products exceeded US$30billion. Prevailing national competition policies are oriented towards addressing harm done in domestic markets, and in some cases merely prohibit cartels without taking strong enforcement measures. In this paper we propose a series of reforms to national policies and steps to enhance international cooperation that will strengthen the deterrents against international cartelization. Furthermore, aggressive prosecution of cartels must be complemented by vigilance in other areas of competition policy. If not, firms will respond to the enhanced deterrents to cartelization by merging or by taking other measures that lessen competitive pressures.

International cartel enforcement : lessons from the 1990s

The enforcement record of the 1990s shows that private international cartels are not defunct--nor do they always fall quickly under the weight of their own incentive problems. Of a sample of 40 such cartels prosecuted by the United States and the European Union in the 1990s, 24 lasted at least four years. And for the 20 cartels in this sample where sales data are available, the annual worldwide turnover in affected products exceeded $30 billion. National competition policies address harm in domestic markets, and in some cases prohibit cartels without taking strong enforcement measures. The authors propose a series of reforms to national policies and steps to enhance international cooperation that will strengthen the deterrents against international cartelization. Furthermore, the authors argue that aggressive prosecution of cartels must be complemented by vigilance in other areas of competition policy. If not, firms will respond to the enhanced deterrents to cartelization by merging or by taking other measures that lessen competitive pressures.Legal Products,Environmental Economics&Policies,Microfinance,Economic Theory&Research,Small Scale Enterprise,Environmental Economics&Policies,Economic Theory&Research,Legal Products,Microfinance,Private Participation in Infrastructure

Financing Invention During the Second Industrial Revolution: Cleveland, Ohio, 1870-1920

For those who think of Cleveland as a decaying rustbelt city, it may seem difficult to believe that this northern Ohio port was once a hotbed of high-tech startups, much like Silicon Valley today. During the late nineteenth and early twentieth centuries, Cleveland played a leading role in the development of a number of second-industrial-revolution industries, including electric light and power, steel, petroleum, chemicals, and automobiles. In an era when production and inventive activity were both increasingly capital-intensive, technologically creative individuals and firms required greater and greater amounts of funds to succeed. This paper explores how the city's leading inventors and technologically innovative firms obtained financing, and finds that formal institutions, such as banks and securities markets, played only a very limited role. Instead, most funding came from local investors who took long-term stakes in start-ups formed to exploit promising technological discoveries, often assuming managerial positions in these enterprises as well. Business people who were interested in investing in cutting-edge ventures needed help in deciding which inventors and ideas were most likely to yield economic returns, and we show how enterprises such as the Brush Electric Company served multiple functions for the inventors who flocked to work there. Not only did they provide forums for the exchange of ideas, but by assessing each other's discoveries, the members of these technological communities conveyed information to local businessmen about which inventions were most worthy of support.

Psychodynamic approaches to teaching medical students about the doctor-patient relationship: Randomised controlled trial

Aims and method: To evaluate the effectiveness of two psychodynamic psychotherapy teaching methods, a student psychotherapy scheme (SPS) and participation in a Balint group, in teaching first-year clinical medical students about doctor-patient communication and the doctor-patient relationship. The 28 students, who were randomly allocated to three groups (SPS group, Balint group starting at baseline and Balint group starting at 3 months and acting as partial controls), were rated on a questionnaire testing their knowledge of emotional and psychodynamic aspects of the doctor-patient relationship administered at baseline, at 3 months and at 1 year. Results: At 3 months, students in the SPS and Balint groups scored higher than the partial control group, the difference approaching significance at the 5% level. At 1 year, participation in either teaching method led to significantly higher scores compared with baseline. Clinical implications: Psychodynamic psychotherapy teaching methods are effective in increasing students’ knowledge of the doctor-patient relationship and potentially also improving their communication skills

Improved Algorithms for Approximate String Matching (Extended Abstract)

The problem of approximate string matching is important in many different areas such as computational biology, text processing and pattern recognition. A great effort has been made to design efficient algorithms addressing several variants of the problem, including comparison of two strings, approximate pattern identification in a string or calculation of the longest common subsequence that two strings share. We designed an output sensitive algorithm solving the edit distance problem between two strings of lengths n and m respectively in time O((s-|n-m|)min(m,n,s)+m+n) and linear space, where s is the edit distance between the two strings. This worst-case time bound sets the quadratic factor of the algorithm independent of the longest string length and improves existing theoretical bounds for this problem. The implementation of our algorithm excels also in practice, especially in cases where the two strings compared differ significantly in length. Source code of our algorithm is available at http://www.cs.miami.edu/\~dimitris/edit_distanceComment: 10 page