How to Identify a Cartel in the Absence of a Concrete Agreement?

How to Identify a Cartel in the Absence of a Concrete Agreement?

1. What is a Cartel-Like Arrangement?

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  Why did the company engage in apparent cartel or price-raising behavior?
  

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  Make a better product? Joint-Venture? Block competitors from the market? Cartelize?
  

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  It is easier for cartels to form where there are:
  

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  Fewer the firms;
  
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  Industry standards (fewer additional terms for potential cartelists to agree upon); and
  
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  Barriers to entry
  

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  Conditions necessary for cartelization  Cartel + Factors
  

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  Must include all significant producers or buyers
  
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  Barriers must exist to keep non-members out of the market or to assure that they cannot expand
  
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  Must have means to administer the cartel
  

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  Fixing the “right” price; determine profit maximizing price for cartel members
  

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  Are the members at this price? Have they excluded low cost firms?
  

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  Publication of profit-maximizing price to cartel members
  
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  Policing or mechanism for detecting cheaters
  
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  Punishment of cheaters
  

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