In the thesis, the goal is to examine which determinants have life-shortening or lifeprolonging effects on cartel duration by considering an up-to-date record of 123 cartel cases convicted by European Commission. The main goal is firstly to replicate the analyses by Hellwig and Hüschelrath on cartel level and secondly to extend their analyses by incorporating new covariates related to either internal enforcement methods and demand volatility. The paper at hand is methodologically in line with previous literature since it uses several Cox proportional hazard specifications and evaluates the findings to different natural death definitions. Furthermore, it also provides nonparametric Kaplan-Meier survival estimates of all categorical variables and estimates time-varying covariates by a piecewise-constant exponential PH model.
Over 28 billion Euro fines imposed by the European competition authority (ECA) in 135 decisions between 1990 and 2018, of which the majority took place after the turn of the millennial, underline that the fight against cartels is far from over. The anticompetitive practices of cartels can lead to increased consumer prices and remain an important point on the agenda of antitrust authorities. As a reaction, the competition policy of the ECA has undergone several changes in the last decades, most prominently observable by the introduction of the EU corporate leniency program in 1996 and its modification ten years later.
Almost all of the current cartels are detected by leniency applications of one of their members because whistle blowing policies allow cartel members to get reductions in fines when they self-report the committed infringements. Before the implementation of these policies, the most crucial threat for internal cartel stability was strategic deviations from the cartel agreement (for example price cuts) by one of the cartel members to increase short-term profits. The risk of being undercut on the one hand and the risk of leniency applications on the other hand place today’s cartel firms in a "between-life-and-death" situation in which persistence of the cartel is equally likely as its breakdown.
Table of Contents
- INTRODUCTION
- DETERMINANTS OF CARTEL SURVIVAL
- Fundamentals of Cartel Stability
- Geographical Scope
- Number of Firms
- Ringleader
- Type of Infringement
- Internal Enforcement Methods
- Entry and Exit Dynamics
- Cartel Enforcement
- Macroeconomic Determinants
- DATA
- Data Set Description
- Variables
- METHODOLOGY AND ESTIMATION STRATEGY
- Principles of Survival Analysis
- Duration Modeling and Competing Risks
- Time-varying Covariates
- Models
- RESULTS AND DISCUSSION
- Estimation Results
- Robustness Checks and Biases
- CONCLUSION
- APPENDIX - TABLES AND FIGURES
Objectives and Key Themes
This thesis investigates the factors that influence the lifespan of cartels, specifically examining those that contribute to a shorter or longer duration. Using a dataset of 123 cartel cases convicted by the European Commission, the author applies various statistical models to analyze the impact of several key determinants on cartel survival.
- Internal cartel organization and enforcement mechanisms
- Market factors, including demand volatility and industry dynamics
- Economic and political context, particularly the role of regulatory enforcement
- The impact of macroeconomic variables on cartel stability
- The influence of geographical scope and the number of participating firms
Chapter Summaries
- Introduction: This chapter establishes the research context and introduces the significance of cartel longevity for economic policy and competition law. The chapter outlines the objectives of the thesis and the key research questions.
- Determinants of Cartel Survival: This chapter provides a theoretical framework for understanding cartel stability by examining various factors that have been identified in existing literature. The chapter explores topics such as the importance of internal organization, enforcement mechanisms, and external factors like market conditions and regulatory pressure.
- Data: This chapter delves into the data used for the analysis, describing the data set and the specific variables considered. The chapter provides information on the source of the data, the criteria used for selection, and the characteristics of the cartels included in the study.
- Methodology and Estimation Strategy: This chapter presents the statistical methods employed to analyze the data. The chapter outlines the principles of survival analysis, including the models used to study the duration of cartels. This chapter also discusses the handling of competing risks and time-varying covariates within the analytical framework.
- Results and Discussion: This chapter presents the findings of the statistical analysis. The chapter discusses the estimated effects of different determinants on cartel survival and provides interpretations of the results. The chapter also examines the robustness of the findings through sensitivity analyses and considers potential sources of bias.
Keywords
Cartel duration, cartel stability, survival analysis, proportional hazard models, competing risks, time-varying covariates, internal enforcement, demand volatility, market structure, competition policy, European Commission.
- Quote paper
- Niklas Martynkiewitz (Author), 2018, Cartels Between Life and Death. What Determines Cartel Survival?, Munich, GRIN Verlag, https://www.grin.com/document/504104
