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Analysis of Cartel Duration: Evidence from EC Prosecuted Cartels

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  • Oindrila De

Abstract

This study first analyses the life span of the cartels convicted by the European Commission during 1990-2008 and explores certain issues regarding the empirical definition of cartel duration. The cross-section analysis then investigates the determinants of cartel break up using a competing risk Cox proportional hazard model. The result shows that external disturbances and changes in the cartels' own structures play a crucial role in cartel demise. Moreover, the cartel members' ability to enforce their agreement through better organization also dictates its success. The analysis also reveals that when a leniency regime is in operation, cartels tend to be more fragile.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:ijecbs:v:17:y:2010:i:1:p:33-65
    DOI: 10.1080/13571510903516946
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    Citations

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    Cited by:

    1. María C. Avramovich, 2020. "The Welfare Implications of the Meeting Design of a Cartel," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(1), pages 59-83, August.
    2. Joan-Ramon Borrell & Juan Luis Jiménez & Carmen García, 2014. "Evaluating Antitrust Leniency Programs," Journal of Competition Law and Economics, Oxford University Press, vol. 10(1), pages 107-136.
    3. 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.
    4. 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.
    5. Tebbe, Eva, 2018. "Once bitten, twice shy? Market size affects the effectiveness of a leniency program by (de-)activating hysteresis effects," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168304, Verein für Socialpolitik / German Economic Association, revised 2018.
    6. 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.
    7. 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.
    8. Polemis, Michael, 2024. "Are Cartels Forever? Global Evidence Using Quantile Regression Analysis," MPRA Paper 120534, University Library of Munich, Germany.
    9. Zhou, J., 2012. "Endogenous Lysine Strategy Profile and Cartel Duration : An Instrumental Variables Approach," Discussion Paper 2012-009, Tilburg University, Tilburg Law and Economic Center.
    10. Jun Zhou, 2016. "The dynamics of leniency application and the knock-on effect of cartel enforcement," Working Papers 13042, Bruegel.
    11. 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.
    12. 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.
    13. Catarina Marvão & Giancarlo Spagnolo, 2018. "Cartels and leniency: Taking stock of what we learnt," Chapters, in: Luis C. Corchón & Marco A. Marini (ed.), Handbook of Game Theory and Industrial Organization, Volume II, chapter 4, pages 57-90, Edward Elgar Publishing.
    14. 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).
    15. Wawa W. Nkosi & Willem H. Boshoff, 2022. "Characteristics of Prosecuted Cartels and Cartel Enforcement in South Africa," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 60(3), pages 327-360, May.
    16. Adam Karbowski, 2020. "A Note on Patents and Leniency," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1, pages 97-108.
    17. Hoang, Cung Truong & Hüschelrath, Kai & Laitenberger, Ulrich & Smuda, Florian, 2014. "Determinants of self-reporting under the European corporate leniency program," International Review of Law and Economics, Elsevier, vol. 40(C), pages 15-23.
    18. Lucas Campio Pinha & Marcelo José Braga, 2019. "Evaluating the effectiveness of the Brazilian Leniency Program," Economics Bulletin, AccessEcon, vol. 39(3), pages 1860-1869.
    19. Zhou, J., 2012. "Endogenous Lysine Strategy Profile and Cartel Duration : An Instrumental Variables Approach," Other publications TiSEM 07e13758-7077-436a-b7d9-3, Tilburg University, School of Economics and Management.
    20. 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.
    21. Michelle Sovinsky, 2022. "Do Research Joint Ventures Serve a Collusive Function?," Journal of the European Economic Association, European Economic Association, vol. 20(1), pages 430-475.
    22. Hubert Buch-Hansen & Clement Levallois, 2015. "The Scale and Geography of Collusion in the European Market: A Longitudinal View," Journal of Common Market Studies, Wiley Blackwell, vol. 53(4), pages 737-752, July.
    23. 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.
    24. Aditya Bhattacharjea & Oindrila De, 2021. "India’s Cartel Penalty Practices, Optimal Restitution and Deterrence," IEG Working Papers 424, Institute of Economic Growth.

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