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Life expectancy of international cartels: An empirical analysis

  • Papers On International Markets
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Abstract

This paper quantifies the importance of the various determinants of life expectancy for international cartels active throughout this century. I explain cartels' optimal duration as a function of market structure and demand growth and estimate the associated parameters recognizing that durability cannot be negative. According to the results, increases in either market shares or cartel concentration prolong life expectancy. Faster demand growth shortens cartel durability but this effect is not reliable. I also find that growth effects are sensitive to both the period of activity and the country coverage.

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Authors and Affiliations

  1. Federal Reserve Board, 20551, Washington, D.C., USA

    Jaime Marquez

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  1. Jaime Marquez
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Additional information

The calculations in this paper use LIMDEP version 5.0. I am grateful to participants in seminars at the Federal Reserve Board and the U.S. International Trade Commission; to Alexander David, Jon Faust, Michael Gibson, William Greene, James Griffin, William Helkie, Dale Henderson, John Irons, Doug Irwin, Michael Leahy, Matthew Pritsker, Stephen Salant, and Janice Shack-Marquez for several suggestions. I also received very useful comments from two anonymous referees. The views expressed in this paper are solely the responsibility of the author and should not be interpreted as reflecting those of the Board of Governors of the Federal Reserve System or other members of its staff.

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Marquez, J. Life expectancy of international cartels: An empirical analysis. Rev Ind Organ 9, 331–341 (1994). https://doi.org/10.1007/BF01025729

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