Governments as Cartel Victims

Posted by D. Daniel Sokol

John Connor of Purdue University's Applied Economics Department explains Governments as Cartel Victims.

ABSTRACT: In this note, I assemble simple empirical evidence on the severity of monetary penalties on modern international cartels, focusing on whether there are systematic differences in severity between cases in which the government itself is the victim of overcharging versus cases where the brunt of the economic injuries are borne by businesses and consumers. I find that government-sector fines are significantly higher relative to affected sales when government bid rigging is the principal form of cartel conduct. This pattern is found across nearly all jurisdictions. These findings call into question whether enforcement resources are tilted unwisely towards cases where the government is the victim.