Abstract

http://ssrn.com/abstract=2144992
 


 



Cartel Organization, Price Discrimination and the Trans-Atlantic Passage, 1899-1911


George Deltas


University of Illinois at Urbana-Champaign - Department of Economics

Richard A. Sicotte


University of Vermont - Department of Economics

September 10, 2012


Abstract:     
This paper studies the operation of trans-Atlantic passenger shipping cartels during the period 1899-1911 and its effects on passenger traffic. We systematically document and categorize cartel agreements on the basis of key aspects of internal organization. Then, we exploit the variation in internal organization across markets and over time to investigate whether any specific organizational aspects were more effective in reducing flows from competitive levels. We find some evidence that the assessment of fines for violations of the agreement enhanced collusion, but no evidence that the posting of bonds (to guarantee the fines) or the formation of pooling arrangements had any incremental effect. We also take advantage of the richness of the data on passenger flows to show that collusion had a smaller effect on first and second-class passenger flows relative to third class service. Finally, we provide estimates of consumer substitution across passenger classes due to collusion and show that such substitution was small but non-negligible, especially during periods of normal cartel operation. Our study has broader implications for the theory of collusion, and on how collusion affects the quality, rather than the quantity, of products purchased by consumers.

Number of Pages in PDF File: 57

Keywords: Collusion, migration

JEL Classification: N71, N73, L92

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Date posted: September 12, 2012  

Suggested Citation

Deltas, George and Sicotte, Richard A., Cartel Organization, Price Discrimination and the Trans-Atlantic Passage, 1899-1911 (September 10, 2012). Available at SSRN: http://ssrn.com/abstract=2144992 or http://dx.doi.org/10.2139/ssrn.2144992

Contact Information

George Deltas (Contact Author)
University of Illinois at Urbana-Champaign - Department of Economics ( email )
1206 South Sixth Street
450 Commerce West
Champaign, IL 61820
United States
217-333-4586 (Phone)
217-244-6678 (Fax)
Richard A. Sicotte
University of Vermont - Department of Economics ( email )
347 Old Mill
Burlington, VT 05405-4160
United States
802-006-0184 (Phone)
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