Title: Do cartels undermine economic efficiency?
Authors : Günster, Andrea
et. al : No
Conference details: 2nd Workshop Industrial Organization, Otranto, Italy, 23-24 June 2011
Issue Date: 2011
License (according to publishing contract) : Licence according to publishing contract
Type of review: No review
Language : English
Subject (DDC) : 338: Production
Abstract: Cartel existence might evoke three types of inefficiencies according to economic theory: allocative, dynamic and x-inefficiency. We estimate the profitability of international cartels thereby testing for the allocative inefficiency hypothesis. Second, we assess dynamic inefficiency measured by considering investments into R&D. Third, we asses x-inefficiency by considering (labor) productivity. Our research analyzes firm-specific financial data for a sample of 143 firms involved in 50 European cartel infringements that took place between 1983 and 2004 involving internationally operating firms. Our findings support increased profitability showing a significant rise in return on assets during cartel years. Ringleaders are more profitable on average than other cartel members. R&D expenditures over sales and assets measuring dynamic efficiency decrease during the cartel period. Productive efficiency – measured as sales over employees – declines during the cartel phase indicating a ‘quiet life’ effect.
Departement: School of Management and Law
Organisational Unit: Center for Economic Policy (FWP)
Publication type: Conference other
URI: https://digitalcollection.zhaw.ch/handle/11475/18349
Appears in Collections:Publikationen School of Management and Law

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