On Corporate Cartels as Common Pool Resources

Abstract

Governing the complex institution of a corporate cartel is a highly involved topic. Operating outside the legal sphere, the cartel firms simultaneously need to harmonize prices and quantities, avoid discovery by the authorities, but also ensure that no member cheats on the others. This exploratory paper applies the Ostromian `governance of the commons' perspective as a novel prism on the conduct of cartels. It proposes a novel interpretation of a cartel's excess profit as a common pool resource in contrast to the common prisoners dilemma perspective. By that, the paper sheds new light on the economic analysis of collusion and provides many starting points for research at the intersection of managerial governance and industrial organization.