Episode Details

Why do cartels fall apart? The normal answer is cheat. A cartel member secretly cuts prices, another firm ratifies the deal, or someone runs to the authorities for leniency. But there’s another source of instability: organizations evolve.

In Episode 7 of *How Cartels Really Work* we examine the European MCAA cartel and Clariant’s takeover of Hoechst’s chemical business. The cartel survived the change of ownership for some time, but Clariant later uncovered the conduct through its compliance efforts and sought leniency, which sparked the European Commission’s investigation. And then, what if the same story has artificial intelligence involved?

A multi-product company may have separate pricing AIs running in different divisions. The senior management might see the profits, but they may not understand the strategies that the systems have learned. RealPage offers a useful comparison. Regulators might spot common pricing schemes and track the movement of nonpublic information among competitors.

But what if every landlord had a different autonomous AI, no confidential data was shared, and the AIs still came up with coordinated-looking prices? The evidence can be voluminous. The interpretation of the law may not.

In this episode, we disentangle human collusion, algorithm-assisted coordination, AI-to-AI coordination, and good old-fashioned interdependence—and why AI may make one traditional cartel-breaking mechanism less reliable.

Read the full article and graphic analysis: https://blog.econworks.com/p/cartels-episode-7-why-cartels-collapseand?r=562wri

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