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| Tekijä: | Schmitt, N. Weder, R. |
| Otsikko: | Sunk costs and cartel formation: Theory and application to the dyestuff industry |
| Lehti: | Journal of Economic Behavior and Organization
1998 : AUG, VOL. 36:2, p. 197-220 |
| Asiasana: | CHEMICAL INDUSTRY OLIGOPOLY CARTELS COSTS MODELS SWITZERLAND |
| Kieli: | eng |
| Tiivistelmä: | To start with, a simple model of entry is developed showing that cartels are more likely to emerge during periods of downturns and in industries with significant sunk costs. Cartel formation is also accompanied by a decline in profits. The framework is then used to investigate the emergence of the Swiss dyestuff export cartel during the inter-war period and empirical evidence is found supporting the main predictions of the model. The analysis indicates that sunk costs and entry may be important determinants of cartel formation and are complementary to the traditional cartel stability conditions. |
SCIMA