How Cartels Endure and How They Fail

Why do some cartels fail and others succeed? This question has intrigued economists for a hundred years, and they have created an extensive body of theory to help explain cartel behaviour. This book looks at the experience of actual cartels and challenges their portrayal as found in the existing literature.The eleven chapters by leading researchers of industrial organization study real examples of industrial collusion. The authors investigate the formation, behaviour, activity and purpose of cartels, and illustrate the intricacies of collusive relationships. In the process they question the existing economic theory surrounding the operation of cartels, which in practice do not always adhere to the textbook models or to complex game theoretic rules. Although much economic research suggests that cartels are doomed to failure, the authors find that there are many examples of industries where cartels have succeeded in controlling prices and output over a prolonged period of time. This book is a groundbreaking attempt to study empirically a range of cartels throughout the world, providing both historical and contemporary examples of collusion to enrich the arguments. Academics, policymakers, lawyers and economists working in the fields of industrial organization and competition policy will find this to be a highly original and thought-provoking volume.