The Determinants of Cartel Duration in Korea

The Determinants of Cartel Duration in Korea 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

The Determinants of Cartel Duration in Korea

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Publisher
Springer US
Copyright
Copyright © 2016 by Springer Science+Business Media New York
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-016-9505-4
Publisher site
See Article on Publisher Site

Abstract

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.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Feb 15, 2016

References

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