The Economics of Collusion: Cartels and Bidding Rings

The Economics of Collusion: Cartels and Bidding Rings

by Robert C. Marshall, Leslie M. Marx
     
 

ISBN-10: 0262017326

ISBN-13: 9780262017329

Pub. Date: 04/27/2012

Publisher: MIT Press

Explicit collusion is an agreement among competitors to suppress rivalry that relies on interfirm communication and/or transfers. Rivalry between competitors erodes profits; the suppression of rivalry through collusion is one avenue by which firms can enhance profits. Many cartels and bidding rings function for years in a stable and peaceful manner despite the

Overview

Explicit collusion is an agreement among competitors to suppress rivalry that relies on interfirm communication and/or transfers. Rivalry between competitors erodes profits; the suppression of rivalry through collusion is one avenue by which firms can enhance profits. Many cartels and bidding rings function for years in a stable and peaceful manner despite the illegality of their agreements and incentives for deviation by their members. In The Economics of Collusion,Robert Marshall and Leslie Marx offer an examination of collusive behavior: what it is, why it is profitable, how it is implemented, and how it might be detected.

Marshall and Marx, who have studied collusion extensively for two decades, begin with three narratives: the organization and implementation of a cartel, the organization and implementation of a bidding ring, and a parent company's efforts to detect collusion by its divisions. These accounts—fictitious, but rooted in the inner workings and details from actual cases—offer a novel and engaging way for the reader to understand the basics of collusive behavior. The narratives are followed by detailed economic analyses of cartels, bidding rings, and detection. The narratives offer an engaging entrée to the more rigorous economic discussion that follows. The book is accessible to any reader who understands basic economic reasoning. Mathematical material is flagged with asterisks.

Product Details

ISBN-13:
9780262017329
Publisher:
MIT Press
Publication date:
04/27/2012
Pages:
320
Product dimensions:
6.28(w) x 9.08(h) x 0.83(d)
Age Range:
18 Years

Table of Contents

Preface ix

1 Introduction 1

1 Collusion in Practice 27

2 Narrative of a Cartel 29

3 Narrative of a Bidding Ring 55

4 Narrative of Cartel Detection 71

II Economics of Cartels 81

5 Suppression of Rivalry by Cartels 83

6 Implementation of Collusion by Cartels 105

7 Beyond the Suppression of Within-cartel Rivalry 143

III Economics of Bidding Rings 161

8 Suppression of Interbidder Rivalry by Rings 163

9 Implementation of Collusion by Rings 187

10 Effects of Auction Design on Rings 199

IV Detection of Collusion Using Economic Evidence 211

11 Plus Factors 213

12 Plus Factors for Rings 241

13 Coordinated Effects in Horizontal Mergers 257

References for EC Decisions 265

References 267

Index of Authors 281

Index of Subjects and Cases 285

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