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Cartel Quotas Under Majority Rule

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Abstract

The authors examine the choice of quotas by legal volume-restricting organizations: cartels, commodity agreements, agricultural marketing boards, and prorationing boards. Unlike their illegal counterparts, legal cartels have published regulations and broader enforcement capabilities. However, differences in costs and size among cartel members still make quota selection contentious. Conflicts over quotas are typically resolved by voting. Side-payments to influence votes are prohibited. The authors examine the predicted effects of this real-world voting institution on prices and welfare. They also deduce the economic consequences of exogenous political changes, such as alterations in the voting weights or in the identity of the voters. Copyright 1995 by American Economic Association.
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Suggested Citation

  • Cave, J. & Salant, S., 1992. "Cartel Quotas Under Majority Rule," Papers 92-04, Michigan - Center for Research on Economic & Social Theory.
    • Handle: RePEc:fth:michet:92-04
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    Cited by:

    1. Charles F. Mason, 2018. "An Experimental Analysis of the Complications in Colluding when Firms are Asymmetric," CESifo Working Paper Series 7047, CESifo.
    2. Cesar Martinelli & Richard Sicotte, 2004. "Voting in Cartels: Theory and Evidence from the Shipping Industry," Working Papers 0404, Centro de Investigacion Economica, ITAM, revised 05 Mar 2004.
    3. Jaime R. Marquez, 1992. "Life expectancy of international cartels: an empirical analysis," International Finance Discussion Papers 439, Board of Governors of the Federal Reserve System (U.S.).
    4. Nie, Pu-yan & Wang, Chan & Wen, Hong-xing, 2021. "Horizontal mergers under uniform resource constraints," Journal of Retailing and Consumer Services, Elsevier, vol. 63(C).
    5. Gupta, Bishnupriya, 1997. "Collusion in the Indian Tea Industry in the Great Depression: An Analysis of Panel Data," Explorations in Economic History, Elsevier, vol. 34(2), pages 155-173, April.
    6. Porter, Robert H., 2020. "Mergers and coordinated effects," International Journal of Industrial Organization, Elsevier, vol. 73(C).
    7. Heintzelman, Martin D. & Salant, Stephen W. & Schott, Stephan, 2009. "Putting free-riding to work: A Partnership Solution to the common-property problem," Journal of Environmental Economics and Management, Elsevier, vol. 57(3), pages 309-320, May.
    8. de Mesnard, Louis, 2009. "Is the French mobile phone cartel really a cartel?," International Journal of Production Economics, Elsevier, vol. 122(2), pages 663-677, December.
    9. Herbert Hovenkamp, 2011. "Harm to Competition Under the 2010 Horizontal Merger Guidelines," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 39(1), pages 3-18, August.
    10. Nikolaus Fink & Philipp Schmidt-Dengler & Konrad Stahl & Christine Zulehner, 2017. "Registered cartels in Austria: an overview," European Journal of Law and Economics, Springer, vol. 44(3), pages 385-422, December.
    11. David L. Weimer, 2010. "Stakeholder governance of organ transplantation: A desirable model for inducing evidence‐based medicine?," Regulation & Governance, John Wiley & Sons, vol. 4(3), pages 281-302, September.
    12. Oleksandr Shcherbakov & Naoki Wakamori, 2017. "Identifying the Degree of Collusion Under Proportional Reduction," Staff Working Papers 17-51, Bank of Canada.
    13. Ghoddusi, Hamed & Nili, Masoud & Rastad, Mahdi, 2017. "On quota violations of OPEC members," Energy Economics, Elsevier, vol. 68(C), pages 410-422.
    14. Simon Loertscher & Leslie Marx, 2014. "An Oligopoly Model for Analyzing and Evaluating (Re)-Assignments of Spectrum Licenses," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 45(3), pages 245-273, November.
    15. Nie, Pu-yan & Chen, You-hua, 2012. "Duopoly competitions with capacity constrained input," Economic Modelling, Elsevier, vol. 29(5), pages 1715-1721.
    16. Pu-yan Nie, 2014. "Effects of capacity constraints on mixed duopoly," Journal of Economics, Springer, vol. 112(3), pages 283-294, July.
    17. Péter Eső & Volker Nocke & Lucy White, 2010. "Competition for scarce resources," RAND Journal of Economics, RAND Corporation, vol. 41(3), pages 524-548, September.
    18. Janda, Karel, 2009. "Signaling the Strength of a Market Entrant," MPRA Paper 17007, University Library of Munich, Germany.

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    Keywords

    cartels ; commodities;

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