Friday, January 20, 2012

Cartels are formed not by collusion alone

Cartels Are an Emergent Phenomenon, Say Complexity Theorists - Technology Review: 'via Blog this'
"This cartel organization is not due to an explicit collusion among agents; instead it arises spontaneously from the maximization of the individual payoffs," say Peixoto and Bornholdt. These guys are clearly studying a parameter space displaying a rich variety of patters. And the cartel-like region of this space has its own patterns of behaviour. It is categorised by sudden and dramatic price variations, particularly moving suddenly upwards but decaying only slowly. These variations can also appear cyclical (but are actually aperiodic).

This more or less exactly matches the price behaviour at gas stations and many other economic areas, such as electricity and natural gas prices in Europe. It would be interesting to see if this kind of behaviour emerges in other markets such as eBay. The big question of course is what to do. Cartels that form by collusion are illegal and clearly not in the interests of the general population. But this work muddies the waters somewhat. If cartel-like behaviour is an emergent property of an ordinary market, how should it be controlled, regulated and punished?

1 comment:

  1. [Re: Organising Action from sbicitizen at Yahoo! Groups by devinder singh gulati
    The iron law of oligarchy is a political theory, first developed by the German sociologist Robert Michels in his 1911 book, Political Parties. It states that …]