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Abstract

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The Political Economy of Antitrust
Type: Book
ISBN: 978-0-44453-093-6

Abstract

Details

The Political Economy of Antitrust
Type: Book
ISBN: 978-0-44453-093-6

Abstract

Many jurisdictions fine illegal cartels using penalty guidelines that presume an arbitrary 10% overcharge. This article surveys more than 700 published economic studies and judicial decisions that contain 2,041 quantitative estimates of overcharges of hard-core cartels. 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. Historical penalty guidelines aimed at optimally deterring cartels are likely to be too low.

Details

The Law and Economics of Class Actions
Type: Book
ISBN: 978-1-78350-951-5

Keywords

Article
Publication date: 11 July 2016

Lu-Ming Tseng

In the insurance industry, it is common for the insurance salespeople to sell insurance products to friends, relatives and associates. However, permitting (or encouraging…

Abstract

Purpose

In the insurance industry, it is common for the insurance salespeople to sell insurance products to friends, relatives and associates. However, permitting (or encouraging) salespeople to sell insurance through personal relationships may result in some ethical conflicts. For example, some insurance salespeople may help relatives or friends with pre-existing medical conditions buy the health insurance. Previous studies on insurance fraud have rarely focused on this problem. Thus, this study aims to investigate the effects of guanxi (guanxi refers to the durable social connections and relationships a Chinese person uses to exchange favors for a specific purpose) on the salespeople’s acceptance of customer–salesperson collusions. Two types of guanxi are discussed in the research. The author further focuses on how the ethical attitudes and intentions are affected by the salespeople’s guanxi considerations, consequence evaluations, perception of peers’ attitudes, perceived harm to other policyholders and perceived probability of being caught.

Design/methodology/approach

Full-time life insurance salespeople from Taiwan were surveyed, and partial least squares method was used in the study.

Findings

The results showed that the types of guanxi, guanxi considerations, consequence evaluations, perception of peers’ attitudes and perceived harm to other policyholders were important in forming the salespeople’s ethical decision-making in the customer–salesperson collusions.

Originality/value

This is the first time that guanxi has been studied as the factor influencing collusive behaviors in the problems of insurance fraud. The results challenged an established belief that the insurance salespeople should first target close relations as they build their portfolio of customers.

Details

International Journal of Conflict Management, vol. 27 no. 3
Type: Research Article
ISSN: 1044-4068

Keywords

Book part
Publication date: 23 November 2015

Malcolm B. Coate

Plus Factors have long played an important role in inferring a price agreement from the totality of the evidence. In response to changes in the case law, economists have…

Abstract

Purpose

Plus Factors have long played an important role in inferring a price agreement from the totality of the evidence. In response to changes in the case law, economists have proposed two alternative paths for the future of price fixing analysis. This paper evaluates the suggested approaches and recommends retaining the enhanced Plus Factor methodology.

Methodology/approach

By carefully defining the Plus Factor concept, three key components of the analysis emerge: (1) information on communications associated with the alleged agreement, (2) economic considerations affecting market competition, and (3) characteristics that serve to differentiate explicit from tacit collusion.

Findings

Developments rationalizing the Plus Factor concept show promise, as the methodology is not more closely related to economic theory. On the other hand, replacement of the Plus Factor methodology with one focused on market performance seems problematic. By abandoning the Plus Factor concept, the economist loses a key institutional constraint on over-aggressive enforcement.

Practical implications

Until advocates can address the difficulties associated with using performance evidence to identify price fixing, the standard Plus Factor concept appears more appropriate. Thus, antitrust analysts should continue to use the Plus Factor methodology to infer agreements in price fixing investigations, as long as the economic rationalization of the specific Plus Factor is clearly presented.

Originality/value

The paper synthesizes a number of recent contributions to the price fixing literature and addresses key issues of interest to the enforcement community. By providing a critique of the proposed policy shift to use performance evidence to infer price fixing liability, the study serves to justify continued application of the Plus Factor methodology.

Details

Economic and Legal Issues in Competition, Intellectual Property, Bankruptcy, and the Cost of Raising Children
Type: Book
ISBN: 978-1-78560-562-8

Keywords

Abstract

Details

The Political Economy of Antitrust
Type: Book
ISBN: 978-0-44453-093-6

Abstract

Details

The Political Economy of Antitrust
Type: Book
ISBN: 978-0-44453-093-6

Book part
Publication date: 16 January 2014

Martin Sefton and Ping Zhang

We compare allocation rules in uniform price divisible-good auctions. Theoretically, a “standard allocation rule (STANDARD)” and a “uniform allocation rule (UNIFORM)”…

Abstract

Purpose

We compare allocation rules in uniform price divisible-good auctions. Theoretically, a “standard allocation rule (STANDARD)” and a “uniform allocation rule (UNIFORM)” admit different types of low-price equilibria, which are eliminated by a “hybrid allocation rule (HYBRID).” We use a controlled laboratory experiment to compare the empirical performances of these allocation rules.

Design/methodology/approach

We conduct three-bidder uniform price divisible-good auctions varying the different allocation rules (standard, uniform, or hybrid) and whether or not explicit communication between bidders is allowed. For the case where explicit communication is allowed we also study six-bidder auctions.

Findings

We find that prices are similar across allocation rules. Under all three allocation rules, prices are competitive when bidders cannot explicitly communicate. With explicit communication, prices are collusive, and we observe collusive prices even when collusive agreements are broken. Collusive agreements are particularly fragile when the gain from a unilateral deviation is larger, and an implication of this is that collusive agreements are more robust under STANDARD.

Research limitations/implications

We do not find conclusive evidence of differences in performance among allocation rules. However, there is suggestive evidence that STANDARD may be more vulnerable to collusion.

Originality/value

Divisible-good uniform price auctions are used in financial markets, but it is not possible to use naturally occurring data to test how alternatives to the standard format would perform. Using laboratory methods we provide an initial test of alternative allocation rules.

Details

Experiments in Financial Economics
Type: Book
ISBN: 978-1-78350-141-0

Keywords

Book part
Publication date: 17 November 2010

Barbara Gray and Sandra Schruijer

The idea that relational processes are central to knowledge creation and knowledge sharing is an idea in good currency (Bouwen & Taillieu, 2004; Brown & Duguid, 1996;…

Abstract

The idea that relational processes are central to knowledge creation and knowledge sharing is an idea in good currency (Bouwen & Taillieu, 2004; Brown & Duguid, 1996; Wenger, 1998). Rather than considering knowledge as a commodity that can be transferred from one mind to another, when knowledge is viewed as a relational practice, it resides in social interactions and is actualized in common practices that evolve within a particular community of practice (Sternberg & Horvath, 1999; Van Looy, Debackere, & Bouwen, 2000). Thus, knowledge is both embedded and emergent — subject to change as participants in a community interact with one another. To understand what is known, it becomes necessary to study how members of an organizational community interact and how their knowledge shifts over time.

Details

Relational Practices, Participative Organizing
Type: Book
ISBN: 978-0-85724-007-1

Article
Publication date: 12 February 2019

Indri Dwi Apriliyanti and Stein Oluf Kristiansen

The purpose of this paper is to illuminate the hidden process of collusion among power holders in state-owned enterprises (SOEs) in an emerging economy, which endures…

Abstract

Purpose

The purpose of this paper is to illuminate the hidden process of collusion among power holders in state-owned enterprises (SOEs) in an emerging economy, which endures despite comprehensive reforms towards democracy and good governance. Why are mechanisms of checks and balances not functioning in the way they should?

Design/methodology/approach

The analysis is based on in-depth interviews with board members, executives, politicians, bureaucrats and representatives from auditing boards involved in the management of SOEs in Indonesia.

Findings

The findings reveal practices of collective conservatism, reciprocal opportunism and normalisation of corruption. The costs of getting into powerful positions are so high that conglomerate business owners gain control over the management of SOEs. The authors use the terms “wall-building and gatekeeping” to explain such cases.

Research limitations/implications

There is a continuous process of wall building and gatekeeping occurring among business oligarchs, bureaucrats and elected politicians in Indonesia. New entrants into the system are co-opted by the established elite.

Practical implications

This study shows collusion, rent-seeking and corruption among political and business elites as well as top officials in the government hinder good governance reforms in state-owned Indonesian enterprises.

Social implications

Collusion and illicit business practices in SOEs are clearly grounded on wall building and gatekeeping. Tackling this problem is a precondition for good governance and an improved legal and regulatory business environment in Indonesia. The ideal separation of powers and the checks and balances for good governance apparently need more than a democracy to break through. A further strengthening of the free press and critical academics will be one crucial contribution.

Originality/value

There is generally a lack of understanding of the context of corruption, such as the influence of institutional and organisational structures. The topic of corruption is also under-researched due to the difficulty of finding empire evidence. This paper contributes to explaining why new political and organisational structures, such as a democratically elected parliament and a particularly designed corruption eradication commission, are not able to hinder rent-seeking practices and illicit political business in state agencies.

Details

International Journal of Emerging Markets, vol. 14 no. 5
Type: Research Article
ISSN: 1746-8809

Keywords

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