|Title:||Do cartels undermine economic efficiency?|
|Authors :||Günster, Andrea|
|et. al :||No|
|Conference details:||2nd Workshop Industrial Organization, Otranto, Italy, 23-24 June 2011|
|License (according to publishing contract) :||Licence according to publishing contract|
|Type of review:||No review|
|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|
|Appears in Collections:||Publikationen School of Management and Law|
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