Rules, Communication and Collusion: Narrative Evidence from the Sugar Institute Case

Genesove, David; Mullin, Wallace P.

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Rules, Communication and Collusion: Narrative Evidence from the Sugar Institute Case

74 Pages Posted: 13 Apr 2001

See all articles by David Genesove

David Genesove

Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR)

Wallace P. Mullin

George Washington University - Department of Economics

There are 2 versions of this paper

Date Written: March 2001

Abstract

Detailed notes on weekly meetings of the sugar-refining cartel show how communication helps firms collude, and so highlight the deficiencies in the current formal theory of collusion. The Sugar Institute did not fix prices or output. Prices were increased by homogenizing business practices to make price cutting more transparent. Meetings were used to interpret and adapt the agreement, coordinate on jointly profitable actions, ensure unilateral actions were not misconstrued as cheating, and determine whether cheating had occurred. In contrast to established theories, cheating did occur, but sparked only limited retaliation, partly due to the contractual relations with selling agents.

Keywords: Anti-trust, collusion, communication, detection, punishment, retaliation, rules

JEL Classification: L13, L41

Suggested Citation: Suggested Citation

Genesove, David and Mullin, Wallace P., Rules, Communication and Collusion: Narrative Evidence from the Sugar Institute Case (March 2001). Available at SSRN: https://ssrn.com/abstract=266740