ch14 - Price-Fixing and Repeated Games Chapter 14...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 14: Price-fixing and Repeated Games 1 Price-Fixing and Repeated Games
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Chapter 14: Price-fixing and Repeated Games 2 Collusion and cartels What is a cartel? attempt to enforce market discipline and reduce competition between a group of suppliers cartel members agree to coordinate their actions prices market shares exclusive territories prevent excessive competition between the cartel members
Background image of page 2
Chapter 14: Price-fixing and Repeated Games 3 Collusion and cartels 2 Cartels have always been with us; generally hidden electrical conspiracy of the 1950s garbage disposal in New York Archer, Daniels, Midland the vitamin conspiracy But some are explicit and difficult to prevent OPEC De Beers shipping conferences
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Chapter 14: Price-fixing and Repeated Games 4 Recent events The 1990s saw record-breaking fines being imposed on firms found guilty of being in cartels illegal conspiracies to fix prices and/or market shares Archer-Daniels-Midland $100 million in 1996 UCAR $110 million in 1998 Hoffman-LaRoche $500 million in 1999
Background image of page 4
Chapter 14: Price-fixing and Repeated Games 5 Recent cartel violations F. Hoffman-LaRoche Ltd. Vitamins 1999 $500 International BASF AG (1999) Vitamins 1999 $225 International SGL Carbon AG Graphite Electrodes 1999 $135 International UCAR International Inc. Graphite Electrodes 1998 $110 International Archer Daniels Midland co. Lysine and Citric Acid 1997 $100 International Citric Acid 1997 $50 International HeereMac v.o.f. Marine Construction 1998 $49 International Hoechst AG Sorbates 1998 $36 International Showa Denko Carbon Inc. Graphite Electrodes 1998 $32.5 International Fujisawa Pharmaceuticals Co. Sodium Gluconate 1998 $20 International Dockwise N.V. Marine Transportation 1998 $15 International Dyno Nobel Explosives 1996 $15 Domestic F. Hoffman-LaRoche Ltd. Citric Acid 1997 $14 International Eastman Chemical Co. Sorbates 1998 $11 International Jungblunzlauer International Citric Acid 1997 $11 International Lonza AG Vitamins 1998 $10.5 International Sodium Gluconate 1997 $10 International
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Chapter 14: Price-fixing and Repeated Games 6 Recent cartel violations 2 Fines steadily grew during the 1990s 0 100 200 300 400 500 600 700 800 900 1000 Criminal Fines ($ million) 1994 1995 1995 1996 1997 1998 1999 Fiscal Year
Background image of page 6
Chapter 14: Price-fixing and Repeated Games 7 Cartels Two implications cartels happen generally illegal and yet firms deliberately break the law Why? pursuit of profits But how can cartels be sustained? cannot be enforced by legal means so must resist the temptation to cheat on the cartel
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Chapter 14: Price-fixing and Repeated Games 8 The incentive to collude Is there a real incentive to belong to a cartel? Is cheating so endemic that cartels fail?
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 36

ch14 - Price-Fixing and Repeated Games Chapter 14...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online