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How Do You Enforce an Illegal Agreement?
Description
Cartel members have a weird contracting problem: they can have a deal, but they can't rely on normal contract law to enforce it. This means cartels have to police themselves.
The episode explores why cartel members monitor one another, why cheating can be profitable for one cartel member, and why the threat of a return to competition can help sustain an anticompetitive agreement using the so-called shipping-container “Box Cartel.” The episode then moves to artificial intelligence.
An AI system can monitor deviations and react faster than human managers. It can respond to competitive punishment and reduced profits. But an artificial intelligence cannot lose his career, suffer reputational damage, or go to jail.
With companies turning more to AI to make decisions, antitrust enforcement has a new deterrence question: who should the law target when the decision-maker can’t be personally punished?
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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