Price Fixing Hits Home: An Empirical Study of US Price-Fixing Conspiracies

This paper analyzes a sample of Section 1, Sherman Act price fixing cases brought by the US Department of Justice between 1961 and 2013. Over 500 cartels were prosecuted during this period. The determinants of cartel formation and cartel breakup are estimated, including analysis of the impact of the...

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Bibliographic Details
Published in:Review of industrial organization 2016-06, Vol.48 (4), p.361-379
Main Authors: Levenstein, Margaret C., Suslow, Valerie Y.
Format: Article
Language:English
Subjects:
Amnesties
Anti-trust legislation
Antitrust
Bid rigging
Business cycles
Cartels
Collusion
Competition
Competition policy
Criminal prosecution
Discount rates
Economic fluctuations
Economic recessions
Economics
Economics and Finance
Financial leverage
Industrial Organization
Interest rates
Justice
Microeconomics
Observational studies
Poisson distribution
Price fixing
Prices
Prosecutions
Recessions
Stability
Statistical analysis
United States
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Summary:This paper analyzes a sample of Section 1, Sherman Act price fixing cases brought by the US Department of Justice between 1961 and 2013. Over 500 cartels were prosecuted during this period. The determinants of cartel formation and cartel breakup are estimated, including analysis of the impact of the discount rate, business cycles, and antitrust policy. We find that cartels are more likely to break up during periods of high real interest rates, presumably because higher interest rates are associated with greater impatience. The adoption of a stronger amnesty policy has no significant impact on cartel breakup over this period, although the results suggest some association with lower cartel formation rates.
ISSN:0889-938X
1573-7160
DOI:10.1007/s11151-016-9520-5