Price Wars and the Stability of Collusion: A Study of the Pre-World War I Bromine Industry

Levenstein, Margaret C.

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Price Wars and the Stability of Collusion: A Study of the Pre-World War I Bromine Industry

NBER Working Paper No. h0050

44 Pages Posted: 13 Nov 2007 Last revised: 20 Feb 2023

See all articles by Margaret C. Levenstein

Margaret C. Levenstein

University of Michigan at Ann Arbor - Survey Research Center; The Stephen M. Ross School of Business at the University of Michigan, Business Economics and Public Policy

Date Written: September 1993

Abstract

Bromine producers colluded to raise prices and profits during most of the period between 1885 and 1914. Collusion was punctuated by price wars in which prices fell sharply. The characteristics of these price wars are compared with those in the Green-Porter and Abreu- Pearce-Stachetti models. Some of the bromine price wars resulted from the imperfect monitoring problems in these models. Those price wars were short and mild. More severe price wars were part of a bargaining process, in which firms tried to force a renegotiation to a new collusive equilibrium with a different distribution of rents.

Suggested Citation: Suggested Citation

Levenstein, Margaret C., Price Wars and the Stability of Collusion: A Study of the Pre-World War I Bromine Industry (September 1993). NBER Working Paper No. h0050, Available at SSRN: https://ssrn.com/abstract=570810