Description Case Microeconomics Automotive Bearings Cartel

 In the spring of 2014, the EU Commission found that a number of European and non-European companies had formed a cartel in the market for automotive bearings. The Commisioned the cartel participants for an amount of € 953 million. In this case you are expected provide an economic analysis of cartels and of the remedies that authorities can impose when they discover cartels. Among others, you are expected to discuss the following issues: 1. With reference to the case carefully identify the market structure in which the automotive bearings companies operate. 2. What evidence is provided in the case of collusive behaviour? More generally what are the symptoms and tests of collusive behaviour? 3. In the market structure discussed above under 1, what conditions make it possible for dominant firms to collude? Is collusion cheat proof? Base your answer o.a. on insights from game theory. 4. Discuss the incentive(s) of the companies to participate in the cartel. 5. Assess the welfare consequences of the companies’ decision to participate in the cartel. Use graphs where possible and appropriate. 6. Identify the direct and indirect costs and benefits of government regulation as applied through competitiion policy. 7. What conclusions can you draw about the Commission decision to impose fines on the cartel participants? Explain why you think it is a good or bad decision. If you believe the fine is an appropriate measure, has it been calculated high/low enough? 8. Writing style/Referencing (APA)/format requirements Instructions: Do not simply answer the questions like you would do in an exam. Write a paper with a story line in stead in which the questions above are discussed (not necessarily in the same order as listed above). Please be aware of the fact that papers are screened for plagiarism. Under no circumstance you are permitted to “copy & paste”. You are expected to use your course text as well as do some research and use peer-reviewed papers. Avoid Google as much as you can. is in any case preferable to its popular brother.

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