Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83498
Authors: 
Normann, Hans-Theo
Tan, Elaine S.
Year of Publication: 
2013
Series/Report no.: 
DICE Discussion Paper 108
Abstract: 
We analyze the effects of cartel policies on firm behavior using data from the German power-cable cartel. Antitrust authorities affected the cartel under two different legal regimes: penalizing the cartel in some years, and exempting it for ten years from the general cartel prohibition. While penalties did not reduce prices or profits, making collusion legal raised profits by at least 16% each year, compared to the time when the illegal cartel was not prosecuted. The threat of penalties was sufficient to reduce profit from collusion. The intended efficiency gains from rationalization, which was the justification for legalizing the cartel, did not materialize.
ISBN: 
9783863041076
Document Type: 
Working Paper

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