Are the CEO of Cartel firms chosen inside the firm, I mean are they promoted internally? Are some of the directors chosen because they are busy and foreigners? Is stability of the management team longer? Are they some papers devoted to,this issue?.
On the stability issue, our old theory predicted that all cartels will break up sooner than later. The reason is that there is a built-in incentive for members of the cartel to cheat, which translates to gains, Now, the example of OPEC seems to defy the stated theory of cartels. This is the area I think that your inquiry is significant. One wonders if it is a leading country that makes the decision and other countries follows. Or is it culture rather than market force that is involve? Interesting question.
Yes. CEOs of many cartel firms chosen inside the firm. See Inside Japanese Business and Kaisha for more details.
This is an interesting question. There might not be a general answer. Some cartels, in particular in procurement tenders, are formed for a single interaction and the arrangements are not (directly or indirectly ) made by CEOs. See US v. W.F. BRINKLEY & SON for a case.
Thanks you for your answers. I am also concerned with disclosure of information to outside investors. The way information is dispatched by cartel firms may be specific in order not to draw too much the attention of the authorities with high profits.
Hi!
I am wondering if CEO compensation, and board of directors' rewards may not be higher in cartel firms than in others firms? As a matter of fact CEO's reputation may be at stake If the cartel 's agreement breaks up...
Hi,
Another argument may be that a lot of cartel organizations are not discovered. Thus, they may be some changes only if some laws or rules get modified. Changes may thus concern strategies and why not....governance!
see: Z Alminas, M Massimo, D Ailin "Busted! now what? effects of cartel enforcement on firm value and corporate policies", 2015. (INSEAD);(HKUST);
regards
Hi, Patrick,
do you know the minimal organ differenciation of cartels? You should think and ask about "CIOs" after this. ... A cartel was/is not an organ by its self, but a separate organization.
Do you mean cartels as historical legal entities or as nowadays illegal associations? - For the former, the classical German cartel theory was groundbreaking [look into: Liefman (1932) Cartels ...].
For the latter you must take in account much more instability. And you already realized a lack of information because of criminalization. If you find much material on the social life in current cartels tell me immediatelly ...
Generally the state and legal attitude toward cartels has/had much influence on their stability. So many cartels were indeed stable and fixed - don't believe apodictive statements claiming only the other way around. Read for this on cartel history for instance of the 1930s: normally stable.
Dear Patrick,
Can we assume that cartels are insider driven? Can we also assume that cartels are governed by block holders and are characterized by ownership concentration? In case we do, board's oversight may be week and directors' as wells as CEO's compensation may be rather below those serving in non-cartel firms. Also, in an insider system there are less incentives for disclosure.
Paul
Hi,
Thanks you for all your contributions.
For me, cartels lead towards monopolistic situations where private benefits may be large, and a huge collusion may occur between members of the board and the CEO. But as you said, little disclosure will take place.
Best regards.
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