Polish cement industry cartel - preliminary examination of collusion existence

Bejger, Sylwester

doi:10.15208/beh.2011.8

“…1 For some cases and empirical analyses concerning these various sources of instability, the reader is referred to Harrington (2006), Levenstein and Suslow (2006, 2011), Connor (2008, and Marshall and Marx (2012). 2 The details are from Connor (2008).…”

Section: N O T E Smentioning

confidence: 99%

“…26 In the Polish Cartel, there is evidence that the quota of Miebach was increased as compensation for their decreased export activities to Germany (paragraph 171 and 479, Polish cartel decision). 27 For details on the Polish cement cartel, the reader is referred to Bejger (2011). 28 Translated from Spenner (1996, p. 48).…”

Section: N O T E Smentioning

confidence: 99%

Rent sharing to control noncartel supply in the German cement market

Harrington

¹

,

Hüschelrath

²

,

Laitenberger

³

2017

Economics Manag Strategy

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. RENT SHARING TO CONTROL NON-CARTEL SUPPLY IN THE GERMAN CEMENT MARKET 1Joseph E. Harrington, Jr. # , Kai Hüschelrath  , and Ulrich Laitenberger  March 2016Abstract A challenge for many cartels is avoiding a destabilizing increase in non-cartel supply in response to having raised price. In the case of the German cement cartel that operated over 1991-2002, the primary source of non-cartel supply was imports from Eastern European cement manufacturers. Industry sources have claimed that the cartel sought to control imports by sharing rents with intermediaries in order to discourage them from sourcing foreign supply. Specifically, cartel members would allow an intermediary to issue the invoice for a transaction and charge a fee even though the output went directly from the cartel member's plant to the customer. We investigate this claim by first developing a theory of collusive pricing that takes account of the option of bribing intermediaries. The theory predicts that the cement cartel members are more likely to share rents with an intermediary when the nearest Eastern European plant is closer and there is more Eastern European capacity outside of the control of the cartel. Estimating a logit model that predicts when a cartel member sells through an intermediary, the empirical analysis supports both predictions.

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“…Bejger (2011) report that the Polish cement firms fixed allocations according to historical shares. Regarding the legal Norwegian cement cartel, Röller and Steen (2006) report that the three firms decided to allocate the domestic market according to the capacity shares of the firms.…”

Section: Related Literaturementioning

confidence: 99%

Competition, Collusion and Spatial Sales Patterns - Theory and Evidence

Hunold

¹

,

Hüschelrath

²

,

Laitenberger

³

et al. 2017

SSRN Journal

0

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. http://ftp.zew.de/pub/zew-docs/dp/dp17035.pdf Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar. Terms of use: Documents inDis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. AbstractWe study competition in markets with transport costs and capacity constraints.We compare the outcomes of price competition and coordination in a theoretical model and find that when firms compete, they more often serve more distant customers who are closer to the competitor's plant. If firms compete, the transport distance varies in the degree of overcapacity, but not if they coordinate their sales. Using a rich micro-level data set of the cement industry in Germany, we study a cartel breakdown to identify the effect of competition on transport distances. Our econometric analyses confirm the theoretical predictions.JEL classification: K21, L11, L41, L61

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“…This made an industry-wide merger necessary to restore profitability. Bejger (2011) report that the Polish cement firms fixed allocations according to historical shares. As regards the legal cartel in Finland, Hyytinen et al (2014) report that the allocation was based on territories which minimized the transport costs.…”

Section: Related Literaturementioning

confidence: 99%

Competition, Collusion and Spatial Sales Patterns - Theory and Evidence

Hunold

¹

,

Hüschelrath

²

,

Laitenberger

³

et al. 2017

SSRN Journal

0

View full text Add to dashboard Cite

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. AbstractWe study competition in markets with significant transport costs and capacity constraints. We compare the cases of price competition and coordination in a theoretical model and find that when firms compete, they more often serve more distant customers that are closer to plants of competitors. By means of a rich micro-level data set of the cement industry in Germany, we provide empirical evidence in support of this result. Controlling for other potentially confounding factors, such as the number of production plants and demand, we find that the transport distances between suppliers and customers were on average significantly lower in cartel years than in non-cartel years.JEL classification: K21, L11, L41, L61

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Polish cement industry cartel - preliminary examination of collusion existence

Cited by 17 publications

References 20 publications

Rent sharing to control noncartel supply in the German cement market

Rent sharing to control noncartel supply in the German cement market

Competition, Collusion and Spatial Sales Patterns - Theory and Evidence

Competition, Collusion and Spatial Sales Patterns - Theory and Evidence

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