Price Fixing Hits Home

This paper analyzes a sample of Section 1, Sherman Act price fixingcases brought by the US Department of Justice between 1961 and 2013. Over 500cartels were prosecuted during this period. The determinants of cartel formation andcartel breakup are estimated, including analysis of the impact of the discount rate,business cycles, and antitrust policy. We find that cartels are more likely to break upduring periods of high real interest rates, presumably because higher interest ratesare associated with greater impatience. The adoption of a stronger amnesty policyhas no significant impact on cartel breakup over this period, although the resultssuggest some association with lower cartel formation rates.