Research

abstract: This paper studies how viewing corporate cartels as networked activities helps explain their stability. Using a dataset of 1, 300 cartels prosecuted between 1990 and 2017, we analyze cartel duration through graph-theoretic measures of firms’ centrality and cartels’ interconnectedness, and compare two cartel network structures—connected and clustered—to identify which is associated with greater cartel stability. Our identification strategy relies on an instrumental variable, the second-degree firms’ centrality, drawn from the applied graph theory literature. First, doubling in firms’ average centrality raises the instantaneous risk of cartel dissolution by more than 60%. Second, a 10 percentage point increase in the share of repeat offenders, used as a measure of cartel interconnectedness, is linked to a reduction of this risk by nearly 15%. Third, cartels embedded in connected networks are significantly more stable than those in clustered networks, with a 21% lower instantaneous risk of dissolution. Overall, our findings highlight the importance of accounting for the network dimension of cartels to better understand the stability and recidivism of corporate cartels.