The authors gratefully acknowledge the comments and suggestions provided by two anonymous referees. Any remaining errors or omissions are the sole responsibility of the authors.
Is All Cartel Activity Evil?*
Article first published online: 6 FEB 2011
© 2011 The Economic Society of Australia
Economic Papers: A journal of applied economics and policy
Volume 29, Issue 4, pages 432–445, December 2010
How to Cite
Torre, A. and Morgan, D. (2010), Is All Cartel Activity Evil?. Economic Papers: A journal of applied economics and policy, 29: 432–445. doi: 10.1111/j.1759-3441.2010.00089.x
- Issue published online: 6 FEB 2011
- Article first published online: 6 FEB 2011
- externalised cost;
- social welfare;
- cartel authorisations
The new Australian cartel laws prohibit a provision of a contract, arrangement or understanding that inter alia, results in price fixing and output restriction between competitors in the relevant market. This is subject to a recognition that sometimes such conduct can be in the public interest, in which case the Australian Competition and Consumer Commission (ACCC) may grant an authorisation. One such instance may be an activity characterised by substantial externalised cost. An authorisation application would need to provide suitable evidence in support of the underlying case being argued. Traditionally in Australia, such evidence has been qualitative in nature; however, where possible, the ACCC and its counterparts in the EU and New Zealand encourage quantitative estimates. This is a case study of the welfare impact of output restrictions in the Australian beer industry, which is a source of substantial negative externalities. A standard simulation exercise is utilised as an example of how applicants and the competition regulator might combine theoretical and quantitative concepts to better achieve the objectives of the new legislation.