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Archive for January 18th, 2011

Are Cartels Trendy?

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I took the above picture last week in the centre of Brussels.  This shop sells modern design furniture.

More importantly, this picture shows why competition agencies will never fully eradicate cartels. The very fact that design shops, political parties, and even modern rock bands deliberately use the world “cartel” as a marketing device brings proof that most people do not view cartels as a bad things. Much to the contrary, to many citizens, the word “cartel” relates to a range of positive things, such as solidarity, strength, etc.

Now, contrast this with Monti’s “cancer of the market economy” or Scalia’s “supreme evil of antitrust” (thanks to Alfonso for reminding me of those quotes)… The rift between antitrust specialists and society at large seems alarmingly wide.

To date, antitrust specialists have failed to explain the detrimental effects of cartels to society. Often, if not systematically, they have used complex language and obscure micro-economics concepts (e.g., deadweight loss, allocative inefficiency, etc).

There is an easy fix a long term remedy to this unfortunate state of affairs: competition authorities, academics, economists and lawyers should seek to quantify the harmful macro-economic impacts of cartels on growth, GDP, employment, productivity, etc. A number of interesting studies have been published on this issue in recent years (see here and here), but I believe that there is still scope for further research.

Written by Nicolas Petit

18 January 2011 at 10:38 pm

Posted in Uncategorized