Economics, Econometrics and Finance
4 years ago

Cartels more likely to break during market booms, driving down prices.

Economic Modelling
Optimal timing of defections from price-setting cartels in volatile markets
Shakill Hassan

Paper Summary

Cartels tend to break up during economic booms, leading to more competitive pricing. Market volatility actually helps cartels stay together by making it harder to predict demand changes. This goes against the idea that price wars happen more during economic downturns.

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