Vertical Restraints in the Bromine Cartel: The Role of Distributors in Facilitating Collusion / Margaret Levenstein.

Format:

Book

Author/Creator:

Levenstein, Margaret.

Contributor:

National Bureau of Economic Research.

Series:

Historical Working Paper Series (National Bureau of Economic Research) no. h0049.

NBER historical working paper series no. h0049

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Vertical Restraints in the Bromine Cartel

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1993.

Summary:

From 1885 to 1902 manufacturers and distributors in the American bromine industry cooperated to increase prices and profits. Like many sectors of the American economy at the time, the bromine industry was made up a large number of small manufacturers and a small number of national distributors. The manufacturers agreed to pool their output and sell only to two distributors. The distributors accumulated excess inventories rather than let the market price fall, but then used those inventories as a threat to deter cheating and new entry. Industry participants designed contracts to balance fluctuations in the costs and benefits from cheating. These contracts succeeded in stabilizing collusion until the entry of new, vertically integrated, mass production firm led to its demise.

Notes:

Print version record

July 1993.