Working Paper: NBER ID: w9511
Authors: Margaret Levenstein; Valerie Suslow; Lynda Oswald
Abstract: We examine the possible effects of private international cartels on developing countries by looking in detail at three recent cartel cases, as well as at a broader cross-section of 42 recently prosecuted international cartels. We discuss the indirect effects on developing country producers, either as competitors or co-conspirators, as well the direct effects of cartels on developing country consumers. By combining trade data with a sample of US and European prosecutions of international cartels in the 1990s, we are able to estimate the order of magnitude of the consequences of these cartels on developing countries as consumers. In 1997, the latest year for which we have trade data, developing countries imported $54.7 billion of goods from a sub-sample of 19 industries that contained a price-fixing conspiracy during the 1990s. These imports represented 5.2% of total imports and 1.2% of GDP in developing countries.
Keywords: international cartels; developing countries; price-fixing; competition policy
JEL Codes: L4; F1; O1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| private international cartels (F53) | increased prices for developing country consumers (F61) |
| private international cartels (F53) | barriers to entry for developing country producers (F14) |
| increased prices for developing country consumers (F61) | harm to consumers in developing countries (F61) |
| barriers to entry for developing country producers (F14) | hinder new entrants (D43) |
| barriers to entry for developing country producers (F14) | create environment for collusion or joint ventures (K21) |
| cartel activities (L41) | slower rate of technological change in developing countries (O39) |