Publisher Summary This chapter discusses inter-industry studies of the relations among various measures of market structure, conduct, and performance. It discusses that tradition has indeed uncovered many stable, robust, and empirical regularities. Inter-industry research has taught much about the way markets look, especially within the manufacturing sector in developed economies, even if it has not shown exactly the way markets work. Work in some areas has produced no clear picture of the important patterns in the data, and non-manufacturing industries have not received attention commensurate with their importance. But cross-section studies are limited by serious problems of interpretation and measurement. Future inter-industry research should adopt a modest, descriptive orientation and aim to complement case studies by uncovering robust empirical regularities that can be used to evaluate and develop theoretical tools. Much of the most persuasive recent work relies on nonstandard data sources, particularly panel data that can be used to deal with disequilibrium problems and industry-specific data, which mitigate the problem of unobservable industry-specific variables.

Inter-industry studies of structure and performance

Following George Stigler (1964), many economists assume that incentive problems undermine attempts by firms to collude to raise prices and restrict output. But the potential profits from collusion can create a powerful incentive as well. Theory cannot tell us, a priori, which effect will dominate: whether or when cartels succeed is thus an empirical question. We examine a wide variety of empirical studies of cartels to answer the following questions: (1) Can cartels succeed? (2) If so, for how long? (3) What impact do cartels have? (4) What causes cartels to break up? We conclude that many cartels do survive, and that the distribution of duration is bimodal. While the average duration of cartels across a range of studies is about five years, many cartels break up very quickly (i.e., in less than a year). But there are many others that last between five and ten years, and some that last decades. Limited evidence suggests that cartels are able to increase prices and profits, to varying degrees. Cartels can also affect other non-price variables, including advertising, innovation, investment, barriers to entry, and concentration. Cartels break up occasionally because of cheating or lack of effective monitoring, but the biggest challenges cartels face are entry and adjustment of the collusive agreement in response to changing economic conditions. Cartels that develop organizational structures that allow them the flexibility to respond to these changing conditions are more likely to survive. Price wars that erupt are often the result of bargaining issues that arise in such circumstances. Sophisticated cartel organizations are also able to develop multipronged strategies to monitor one another to deter cheating and a variety of interventions to increase barriers to entry.

https://www.econstor.eu/bitstream/10419/105725/1/2002-01.pdf

What determines cartel success

In an article that forms part of the PLoS Medicine series on Big Food, guest editors David Stuckler and Marion Nestle lay out why more examination of the food industry is necessary, and offer three competing views on how public health professionals might engage with Big Food.

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Big Food, Food Systems, and Global Health

https://www.dice.hhu.de/fileadmin/redaktion/Fakultaeten/Wirtschaftswissenschaftliche_Fakultaet/DICE/Discussion_Paper/065_Fonseca_Normann.pdf

Explicit vs. Tacit Collusion – The Impact of Communication in Oligopoly Experiments

/pdf/the-economics-of-tacit-collusion-hinpb4p8rk.pdf

The Economics of Tacit Collusion

Capacity constraints, mergers and collusion

Profit rates and structural variables in French manufacturing industries

Over the last decade, international cooperation between national competition authorities has become one of the hottest topics in the world of antitrust. Tools for cooperation have been developed and there is clear evidence that national antitrust agencies consider international cooperation to be crucially important for their agencies and are ready to devote increasingly important resources to this activity.

International Cooperation on Competition: Myth, Reality and Perspective:

The issue of institutional design of competition authorities has attracted increasing interest since the early 2000 but requires further elaboration. This article attempts to fill some gaps by providing a general framework to examine a number of dimensions of this issue under three headings: the goals, the functions and the organization of competition authorities. While there is no unique institutional design which would fit all countries, a number trade-offs should be considered in designing a competition authority. These trade-offs may lead to different designs across countries depending on the local conditions. Ultimately choosing the best possible design for the competition authority given the local conditions is crucial to ensure that the competition authority is most effectively able to discharge its duties.

The Institutional Design of Competition Authorities: Debates and Trends

FOLLOWING the pioneering article of Harberger "Monopoly and Resource Allocation" [61, various authors have tried to assess the importance of the overall welfare loss accruing from the presence of monopolistic behavior of firms in the American economy. Those authors, using a partial equilbrium framework, have concerned themselves only with the static misallocations due to monopoly pricing. They have thus avoided more controversial questions such as estimating the effect of monopolies on the rate of technical progress. Yet as Bergson [1] aptly put it

Frédéric Jenny

Papers

Capacity constraints, mergers and collusion

Profit rates and structural variables in French manufacturing industries

International Cooperation on Competition: Myth, Reality and Perspective:

The Institutional Design of Competition Authorities: Debates and Trends

Aggregate Welfare Loss Due to Monopoly Power in the French Economy: Some Tentative Estimates