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J Ind Compet Trade (2016) 16:81100
DOI 10.1007/s10842-015-0204-x
Kai Hschelrath1,2 & Tobias Veith3
Received: 18 February 2015 /Revised: 16 August 2015 /
Accepted: 1 September 2015 /Published online: 17 September 2015 # Springer Science+Business Media New York 2015
Abstract We use a unique dataset of about 340,000 market transactions from 36 smaller and larger customers of German cement producers to study the price behavior before and after the breakdown of a German cement cartel. We find that, first, while the cartel agreement was active, cartel members set higher list prices than non-cartel members; however, larger rebates granted by the cartel members led to similar transaction prices. Second, after the cartel breakdown, both cartel- and non-cartel members reduced transaction prices to a far larger extent than list prices. We build on these results and discuss implications for competition policy.
Keywords Competition policy. Price behavior . Cartels . Cement . List prices . Rebates
JEL Classification L12 . L21 . L41 . L61 . K21
We are indebted to an anonymous reviewer and Kenneth Corts, Stephen Davies, Robert Feinberg, David Haddock, Anton-Giulio Manganelli, Stephen Martin, Wallace Mullin, Jakob Rggeberg, Allen Sanderson, Maarten Pieter Schinkel, David Ulph and Lawrence White for helpful comments and suggestions on earlier versions of the article. The usual disclaimer applies. An earlier version of the article circulated under the title The Impact of Cartelization on Pricing Dynamics Evidence from the German Cement Industry.
Both authors were involved in a study on cartel damage estimations which was financially supported by Cartel Damage Claims (CDC), Brussels. The study is published in German (see Hschelrath et al., 2012). The research presented in this article uses the same raw dataset, however, is not part of the commissioned study. We are indebted to CDC for the provision of the dataset and their willingness to discuss our analyses and results. Simon Reese provided excellent research assistance.
* Kai Hschelrath [email protected]
Tobias Veith [email protected]
1 Competition and Regulation Research Group, ZEW Centre for European Economic Research,
P.O. Box 10 34 43, D-68034 Mannheim, Germany
2 University of Mannheim, L7, 3-5, 68131 Mannheim, Germany
3 University of Applied Sciences, Schadenweilerhof, 72108 Rottenburg, Germany
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