The impact of cartel dissolution on prices: Evidence from the air cargo cartel

Abstract

I analyze pricing behavior before and after the detection of an air cargo cartel using a novel, hand-collected dataset. I find that prices did not decline after the cartel's detection. Additionally, pricing patterns are consistent with post-cartel tacit collusion. My findings suggest that airlines' cartel activity (specifically, the development of a methodology for determining the collusive price) laid a foundation for future tacit collusion. As a result, airlines profited from cartel activity, and shippers paid elevated prices, long after the cartel's dissolution.