Anatomy of Cartel Contracts

Ari Hyytinen, Frode Steen, Otto Toivanen
2013 Social Science Research Network  
We study cartel contracts using data on 18 contract clauses of 109 legal Finnish manufacturing cartels. One third of the clauses relate to raising profits; the others deal with instability through incentive compatibility, cartel organization, or external threats. Cartels use three main approaches to raise profits: Price, market allocation, and specialization. These appear to be substitutes. Choosing one has implications on how cartels deal with instability. Simplifying, we find that large
more » ... s agree on prices, cartels in homogenous goods industries allocate markets, and small cartels avoid competition through specialization. JEL: L40, L41, K12
doi:10.2139/ssrn.2382488 fatcat:3nsd7ked5zanbchcsokd56saou