Factors influencing the magnitude of cartel overcharges: An empirical analysis of food-industry cartels

Using overcharge estimates for 395 cartel episodes from the 18^th to the 21^st century, we evaluate the impact of cartel characteristics on the size of overcharges imposed by cartels across several geographic regions and antitrust law regimes. The results of our study have important policy implications. We find that the average overcharge imposed by cartels in our sample is 19 percent with the median of 16 percent of the selling price. Food industry cartels achieve lower overcharges than domestic cartels. Longer cartel episodes generate higher levels of overcharges. Cartels that were found or pled guilty achieve approximately the same levels of overcharges as legal cartels. [JEL classifications: L1, L2, L4, L6]. © 2007 Wiley Periodicals, Inc. Agribusiness 23: 17–33, 2007.