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Meet John Connor, Mr. Cartel

Here is an article (you might have to be on the campus network to view this article) by Paul Voosen that appeared recently in The Chronicle of Higher Education about cartels, price fixing agreements and an economist who has become one of the leading experts on international price fixing cases.  In my microeconomics classes, we will be looking at cartels and price fixing agreements in chapter 18, on oligopolies, near the end of the term.

As you will see, John Connor has done well by becoming a sought-after expert on cartel pricing.  The article also provides some ideas on cartels and their abilities to sustain high prices.

Thanks to Tyler Cowen and Alex Taborrok of the Marginal Revolution for pointing out this article.

-MC

4 Responses to “Meet John Connor, Mr. Cartel”

  1. SP says:

    As said “Crime does pay”, the silent profitable feature of Cartel has to be working under the radar. When they go unnoticed, these firms colluding together can definitely earn some profit before they incur any loss, get caught or get cheated on by its partners. I think cartel would be especially prevalent in areas where the firm whether be in national or global are not well monitored. I believe that whatever the situation might be, even if they decide to form cartel, the firms will face a scenario similar to prisoner’s dilemma and will end up producing at Nash equilibrium.

  2. dl says:

    Well a lot of them don’t get caught because they raise their prices by a smaller increment so they can get by unseen.

    Personally, I understand that cartels are basically monopolies and that this can hurt innovation in an industry and can slow economic growth. But I also believe in freedom and the idea of a more pure and solid form of capitalism. I don’t think necessarily that cartels should be illegal. Maybe I’m wrong but if I had a business and my best friend had another similar business. It should be our own choice if we want to collectively work together to meet goals. We own the business. That’s just the way I think it should be, regardless of impact. You should have the freedom of choice with what to do with your own property.

    On the other hand, I can see how this would stifle innovation and make a barrier to entry for new firms. So to an extent I can agree, but I still feel like they enforce monopoly laws way too harshly than they should be.

  3. vg says:

    It is illegal for companies to come together and price fix. But it still happens. Many 3rd world countries do not have the regulations or the governmental authority to check the companies and they get away with it at times.

    • dl says:

      Well a lot of them don’t get caught because they raise their prices by a smaller increment so they can get by unseen.

      Personally, I understand that cartels are basically monopolies and that this can hurt innovation in an industry and can slow economic growth. But I also believe in freedom and the idea of a more pure and solid form of capitalism. I don’t think necessarily that cartels should be illegal. Maybe I’m wrong but if I had a business and my best friend had another similar business. It should be our own choice if we want to collectively work together to meet goals. We own the business. That’s just the way I think it should be, regardless of impact. You should have the freedom of choice with what to do with your own property.

      On the other hand, I can see how this would stifle innovation and make a barrier to entry for new firms. So to an extent I can agree, but I still feel like they enforce monopoly laws way too harshly than they should be.

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