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Industrial Organization Workshop - Mitsuru (Michi) Igami

Wed, 05/03/2017 - 11:40am

Mitsuru Igami

Yale University

498 Uris Hall


Why do some cartels survive for a decade but others collapse within a few years? Models of collusion and repeated games are usually difficult to identify from observational data, but the vitamin cartels, one of the most prominent cases in recent history, provide direct evidence on their internal organization in the form of American court documents and European antitrust enforcement. Our estimates suggest the cartel leader’s incentive to collude diminished significantly at the time of the vitamin C cartel’s actual collapse in 1995, mainly because of deteriorating demand conditions and unexpected increases of fringe supply, whereas the markets for beta carotene, vitamin A, and vitamin E remained stable until prosecution in 1999. We also find that an earlier consummation of the 2001 BASF-Takeda merger would have saved the vitamin C cartel.

Event Categories: Industrial Organization