This paper analyzes a database of Korean Fair Trade Commission anti-cartel cases from 1989 through 2013 to explain determinants of reported cartel duration. These are all formal (rather than tacit) cartels, with start and end dates as determined by the KFTC; furthermore, our analysis does not address the question of frequency of cartel attempts. Nevertheless, we find that the expected fine imposed, normalized by number of firms and cartel duration, seems to be viewed ex ante as a cost of collusion—limiting duration—while foreign company involvement in cartels generally has promoted greater cartel stability (though perhaps less so in recent years). We also find that a larger number of participating firms generally limits cartel stability, though the statistical significance of this finding is not completely robust to specification choices. While not our primary focus, leniency/amnesty programs have generally expected effects on cartel stability.
Review of Industrial Organization – Springer Journals
Published: Feb 15, 2016
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