IDEAS home Printed from https://ideas.repec.org/a/kap/revind/v48y2016i4d10.1007_s11151-016-9505-4.html
   My bibliography  Save this article

The Determinants of Cartel Duration in Korea

Author

Listed:
  • Robert M. Feinberg

    (American University)

  • Hyunchul Kim

    (Sungkyunkwan University)

  • Minsoo Park

    (Sungkyunkwan University
    CERK)

Abstract

This paper analyzes a database of Korean Fair Trade Commission anti-cartel cases from 1989 through 2013 to explain determinants of reported cartel duration. These are all formal (rather than tacit) cartels, with start and end dates as determined by the KFTC; furthermore, our analysis does not address the question of frequency of cartel attempts. Nevertheless, we find that the expected fine imposed, normalized by number of firms and cartel duration, seems to be viewed ex ante as a cost of collusion—limiting duration—while foreign company involvement in cartels generally has promoted greater cartel stability (though perhaps less so in recent years). We also find that a larger number of participating firms generally limits cartel stability, though the statistical significance of this finding is not completely robust to specification choices. While not our primary focus, leniency/amnesty programs have generally expected effects on cartel stability.

Suggested Citation

  • Robert M. Feinberg & Hyunchul Kim & Minsoo Park, 2016. "The Determinants of Cartel Duration in Korea," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 48(4), pages 433-448, June.
    • Handle: RePEc:kap:revind:v:48:y:2016:i:4:d:10.1007_s11151-016-9505-4
    DOI: 10.1007/s11151-016-9505-4
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11151-016-9505-4
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11151-016-9505-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Oindrila De, 2010. "Analysis of Cartel Duration: Evidence from EC Prosecuted Cartels," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 17(1), pages 33-65.
    2. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(2), pages 185-199.
    3. Joseph E. Harrington & Myong-Hun Chang, 2009. "Modeling the Birth and Death of Cartels with an Application to Evaluating Competition Policy," Journal of the European Economic Association, MIT Press, vol. 7(6), pages 1400-1435, December.
    4. Eliane Catilina & Robert Feinberg, 2006. "Market Power and Incentives to Form Research Consortia," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 28(2), pages 129-144, March.
    5. Robert M. Feinberg & Minsoo Park, 2015. "Deterrence Effects Of Korean Antitrust Enforcement On Producer Prices And Profit Margins," Journal of Competition Law and Economics, Oxford University Press, vol. 11(4), pages 917-933.
    6. Dick, Andrew R, 1996. "When Are Cartels Stable Contracts?," Journal of Law and Economics, University of Chicago Press, vol. 39(1), pages 241-283, April.
    7. Stephen Davies & Oindrila De, 2013. "Ringleaders in Larger Number Asymmetric Cartels," Economic Journal, Royal Economic Society, vol. 123(11), pages 524-544, November.
    8. Yun Jeong Choi & Kyoung Soo Hahn, 2014. "How Does A Corporate Leniency Program Affect Cartel Stability? Empirical Evidence From Korea," Journal of Competition Law and Economics, Oxford University Press, vol. 10(4), pages 883-907.
    9. Fonseca, Miguel A. & Normann, Hans-Theo, 2012. "Explicit vs. tacit collusion—The impact of communication in oligopoly experiments," European Economic Review, Elsevier, vol. 56(8), pages 1759-1772.
    10. Joseph E. Harrington, Jr. & Yanhao Wei, 2014. "What Can the Duration of Discovered Cartels Tell Us About the Duration of Cartels?," PIER Working Paper Archive 14-042, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    11. Brenner, Steffen, 2009. "An empirical study of the European corporate leniency program," International Journal of Industrial Organization, Elsevier, vol. 27(6), pages 639-645, November.
    12. Posner, Richard A, 1970. "A Statistical Study of Antitrust Enforcement," Journal of Law and Economics, University of Chicago Press, vol. 13(2), pages 365-419, October.
    13. Hay, George A & Kelley, Daniel, 1974. "An Empirical Survey of Price Fixing Conspiracies," Journal of Law and Economics, University of Chicago Press, vol. 17(1), pages 13-38, April.
    14. Margaret C. Levenstein & Valerie Y. Suslow, 2011. "Breaking Up Is Hard to Do: Determinants of Cartel Duration," Journal of Law and Economics, University of Chicago Press, vol. 54(2), pages 455-492.
    15. Joseph E. Harrington, 2008. "Optimal Corporate Leniency Programs," Journal of Industrial Economics, Wiley Blackwell, vol. 56(2), pages 215-246, June.
    16. Nathan H. Miller, 2009. "Strategic Leniency and Cartel Enforcement," American Economic Review, American Economic Association, vol. 99(3), pages 750-768, June.
    17. Valerie Y. Suslow, 2005. "Cartel contract duration: empirical evidence from inter-war international cartels," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 14(5), pages 705-744, October.
    18. Jeroen Hinloopen & Adriaan R. Soetevent, 2008. "Laboratory evidence on the effectiveness of corporate leniency programs," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 607-616, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Roger D. Blair & Wenche Wang, 2018. "The NCAA Cartel and Antitrust Policy," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 52(2), pages 351-368, March.
    2. Joan-Ramon Borrell & Carmen García & Juan Luis Jiménez & José Manuel Ordóñez-de-Haro, 2022. ""Cartel destabilization effect of leniency programs"," IREA Working Papers 202213, University of Barcelona, Research Institute of Applied Economics, revised Sep 2022.
    3. Peter T. Dijkstra & Jonathan Frisch, 2018. "Sanctions and Leniency to Individuals, and its Impact on Cartel Discoveries: Evidence from the Netherlands," De Economist, Springer, vol. 166(1), pages 111-134, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Joan-Ramon Borrell & Carmen García & Juan Luis Jiménez & José Manuel Ordóñez-de-Haro, 2022. ""Cartel destabilization effect of leniency programs"," IREA Working Papers 202213, University of Barcelona, Research Institute of Applied Economics, revised Sep 2022.
    2. Sven Heim & Kai Hhschelrath & Ulrich Laitenberger & Yossi Spiegel, 2017. "Minority Share Acquisitions and Collusion: Evidence from the Introduction of National Leniency Programs," Working Papers hal-01952937, HAL.
    3. Jochem, Annabelle & Parrotta, Pierpaolo & Valletta, Giacomo, 2020. "The impact of the 2002 reform of the EU leniency program on cartel outcomes," International Journal of Industrial Organization, Elsevier, vol. 71(C).
    4. Lucas Campio Pinha & Marcelo José Braga, 2019. "Evaluating the effectiveness of the Brazilian Leniency Program," Economics Bulletin, AccessEcon, vol. 39(3), pages 1860-1869.
    5. Peter T. Dijkstra & Jonathan Frisch, 2018. "Sanctions and Leniency to Individuals, and its Impact on Cartel Discoveries: Evidence from the Netherlands," De Economist, Springer, vol. 166(1), pages 111-134, March.
    6. Hinloopen, Jeroen & Onderstal, Sander, 2014. "Going once, going twice, reported! Cartel activity and the effectiveness of antitrust policies in experimental auctions," European Economic Review, Elsevier, vol. 70(C), pages 317-336.
    7. Hellwig, Michael & Hüschelrath, Kai, 2018. "When Do Firms Leave Cartels? Determinants And The Impact On Cartel Survival," International Review of Law and Economics, Elsevier, vol. 54(C), pages 68-84.
    8. Rau, Holger & Clemens, Georg, 2014. "Do Leniency Policies facilitate Collusion? Experimental Evidence," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100509, Verein für Socialpolitik / German Economic Association.
    9. Chen, Zhiqi & Ghosh, Subhadip & Ross, Thomas W., 2015. "Denying leniency to cartel instigators: Costs and benefits," International Journal of Industrial Organization, Elsevier, vol. 41(C), pages 19-29.
    10. Jun Zhou, 2016. "The Rise and Fall of Cartels with Multi-market Colluders," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 48(4), pages 381-403, June.
    11. Margaret C. Levenstein & Valerie Y. Suslow, 2011. "Breaking Up Is Hard to Do: Determinants of Cartel Duration," Journal of Law and Economics, University of Chicago Press, vol. 54(2), pages 455-492.
    12. Clemens, Georg & Rau, Holger A., 2014. "Do leniency policies facilitate collusion? Experimental evidence," DICE Discussion Papers 130, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    13. Andres, Maximilian & Bruttel, Lisa & Friedrichsen, Jana, 2021. "The leniency rule revisited: Experiments on cartel formation with open communication," International Journal of Industrial Organization, Elsevier, vol. 76(C).
    14. Zhou, Jun, 2011. "Evaluating Leniency with Missing Information on Undetected Cartels: Exploring Time-Varying Policy Impacts on Cartel Duration," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 353, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    15. Perrotta Berlin, Maria & Spagnolo, Giancarlo & Qin, Bei, 2015. "Leniency, Asymmetric Punishment and Corruption: Evidence from China," SITE Working Paper Series 34, Stockholm School of Economics, Stockholm Institute of Transition Economics, revised 25 May 2017.
    16. Stephen Davies & Franco Mariuzzo & Peter L. Ormosi, 2018. "Quantifying The Deterrent Effect Of Anticartel Enforcement," Economic Inquiry, Western Economic Association International, vol. 56(4), pages 1933-1949, October.
    17. Jun Zhou, 2016. "The dynamics of leniency application and the knock-on effect of cartel enforcement," Working Papers 13042, Bruegel.
    18. Maximilian Andres & Lisa Bruttel & Jana Friedrichsen, 2019. "The Effect of a Leniency Rule on Cartel Formation and Stability: Experiments with Open Communication," Discussion Papers of DIW Berlin 1835, DIW Berlin, German Institute for Economic Research.
    19. Bodnar, Olivia & Fremerey, Melinda & Normann, Hans-Theo & Schad, Jannika Leonie, 2021. "The effects of private damage claims on cartel activity: Experimental evidence," DICE Discussion Papers 315, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE), revised 2021.
    20. Georg Clemens & Holger A. Rau, 2019. "Do discriminatory leniency policies fight hard‐core cartels?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(2), pages 336-354, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:revind:v:48:y:2016:i:4:d:10.1007_s11151-016-9505-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.