Three essays on the effectiveness of overt collusion: Cartel overcharges, cartel stability and cartel success

Based on unique data characterizing private cartel behavior since the 1770s, this dissertation presents an empirical analysis of four measures of success of overt collusive conduct: overcharges, stability, duration, and a multidimensional index of cartel success. Factors hypothesized to contribute to success include market structure, internal organization, and legal environment. The results of this research make important contributions to cartel studies and the design of antitrust policies. Empirical findings suggest that markets characterized by a high degree of seller concentration provide a more favorable environment for cartel success than less concentrated markets. Overcharges attained in concentrated markets are higher, and cartels are more stable. The firms\u27 size inequality within the cartel is negatively related to cartel success. There is mixed evidence about the impact of changes in the antirust law environment on cartel success. First, antitrust enforcement appears to be directed at cartels that attain lower overcharges rather than cartels that achieve higher overcharges. Second, stricter antitrust regulations tend to target cartel overcharges to a higher extent than they target cartel duration. Although cartel overcharges tend to decline over time, the duration of cartel agreements tends to increase over time. The multidimensional index of cartel success tends to increase over time, suggesting that cartels have become more successful as antitrust laws become stricter. However, there is also evidence that antitrust enforcement since 1990 has been the most effective. The overcharges are the lowest during this period. This research shows that overcharges tend to be lower in the countries with the most mature antitrust systems. Empirical findings suggest that current antitrust policy presumptions about the average gain from price-fixing are likely to be too low. Therefore, fines calculated based on these presumptions typically result in sub-optimal deterrence