Economy drives people to seize opportunities and growth, words that are being loosely defined by some companies. The feasibility of European Union’s single market lies in the strict compliance of its trade agreements, its imposition, and monitoring. Anticompetitive activities like limiting production, mergers, price fixing and cartels undermines the Union’s common market.
This paper will explore the European truck manufacturer’s cartel case. The truck manufacture’s collusion to fix their prices and the actions taken by the EU commission against the truck cartel will be examined. It aims to demonstrate the effects of price fixing on a free market. How does price fixing affect free markets?
This paper is in two section: Section 1 discusses in brief of what is a cartel. The history of EU’s truck cartel formation until its dissolution will be narrated. Section 2 talks about the European Commission’s role in ensuring economic efficiency. The principle of game theory will be used to explain the incentive scheme as the penalty yardstick in motivating cartel participating firms to whistle blow. Price fixing and its effects on consumer behavior and firm’s output will also be discussed. This paper will conclude with a statement to its purpose statement.
This paper assumes that the reader has some intermediate economic knowledge pertaining to …show more content…
Subsequent high-level management meetings at tradeshow's sidelines paved for the formation of a European truck manufacturer’s cartel. The truck cartel started in 1997 and spanned 14 years of existence. The cartel fixed a higher price of their 9 out of 10 trucks sold within Europe and passed on the costs of emission tests compliance to their buyers. The collusion has been significantly profitable for the cartel members as their collective businesses account for 90% of Europe’s medium-to-large
This paper will explore the European truck manufacturer’s cartel case. The truck manufacture’s collusion to fix their prices and the actions taken by the EU commission against the truck cartel will be examined. It aims to demonstrate the effects of price fixing on a free market. How does price fixing affect free markets?
This paper is in two section: Section 1 discusses in brief of what is a cartel. The history of EU’s truck cartel formation until its dissolution will be narrated. Section 2 talks about the European Commission’s role in ensuring economic efficiency. The principle of game theory will be used to explain the incentive scheme as the penalty yardstick in motivating cartel participating firms to whistle blow. Price fixing and its effects on consumer behavior and firm’s output will also be discussed. This paper will conclude with a statement to its purpose statement.
This paper assumes that the reader has some intermediate economic knowledge pertaining to …show more content…
Subsequent high-level management meetings at tradeshow's sidelines paved for the formation of a European truck manufacturer’s cartel. The truck cartel started in 1997 and spanned 14 years of existence. The cartel fixed a higher price of their 9 out of 10 trucks sold within Europe and passed on the costs of emission tests compliance to their buyers. The collusion has been significantly profitable for the cartel members as their collective businesses account for 90% of Europe’s medium-to-large