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How Do You Enforce an Illegal Agreement?
Description
The problem with a cartel is that its agreement is illegal. If a member of a cartel cheats, the other members can’t simply sue in court and get a judge to enforce the agreement. So cartels need their own systems of monitoring, detection, and punishment.
On this episode of How Cartels Really Work, we take a look at the economics of cartel discipline through the alleged shipping-container “Box Cartel,” which allegedly used production quotas, financial penalties, and 87 cameras across 49 production lines to ensure compliance.
What is surprising is the punishment. If a cartel member cheats, the ultimate response may be a return to competition and the loss of future cartel profits. Then AI changes the narrative. AI could watch the competition, see any deviations, and respond faster than human managers. Even an artificial intelligence can be economically retaliated against.
But prison can't. That presents a new question for antitrust enforcement: If the decision-maker is an AI, who is the law trying to deter?
Read the full article and graphic analysis: https://blog.econworks.com/p/cartels-episode-4-how-do-you-enforce?r=562wri
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