Hunger has complex causes and can be exacerbated by the actions and/or inactions of various actors, such as states, intergovernmental organizations, and transnational corporations. A comparison of these findings with evidence on the incidence of collusion suggests that the welfare loss from collusive pricing may often be smaller in industries where cartels tend to form than in those where collusion is more difficult to sustain. Crucially, these effects are not observed for industries that were not affected by the cartel law. There is weaker evidence of a fall in price-cost margins in consumer good and advertising-intensive relative to producer good and low-advertising industries. Price-cost margins declined after the breakdown of cartels in low-capital and larger-sized industries relative to capital-intensive and smaller-sized ones. These theoretical results are consistent with evidence from a natural experiment of policy reform, the introduction of cartel law in the UK in the late 1950s. The cartel overcharge is larger the lower the entry cost and the larger the market size, and is independent of the degree of product differentiation. In a differentiated oligopoly model with free entry, the static welfare loss from collusion is larger the lower the entry cost, the larger the market size and the higher the degree of product differentiation. Historical penalty guidelines aimed at optimally deterring cartels are likely to be too low. The primary findings are: (1) the median average long-run overcharge for all types of cartels over all time periods is 23.0% (2) the mean average is at least 49% (3) overcharges reached their zenith in 1891-1945 and have trended downward ever since (4) 6% of the cartel episodes are zero (5) median overcharges of international- membership cartels are 38% higher than those of domestic cartels (6) convicted cartels are on average 19% more effective at raising prices as unpunished cartels (7) bid-rigging conduct displays 25% lower markups than price-fixing cartels (8) contemporary cartels targeted by class actions have higher overcharges and (9) when cartels operate at peak effectiveness, price changes are 60-80% higher than the whole episode. This article surveys more than 700 published economic studies and judicial decisions that contain 2,041 quantitative estimates of overcharges of hard-core cartels. Many jurisdictions fine illegal cartels using penalty guidelines that presume an arbitrary 10% overcharge.
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