The first comprehensive economic and legal analysis of hub-and-spoke cartels, with detailed case studies.

A cartel forms when competitors conspire to limit competition through coordinated actions. Most cartels are composed exclusively of firms that would otherwise be in competition, but in a hub-and-spoke cartel, those competitors (“spokes”) conspire with the assistance of an upstream supplier or a downstream buyer (“hub”). This book provides the first comprehensive economic and legal analysis of hub-and-spoke cartels, explaining their formation and how they operate to create and sustain a collusive environment. Sixteen detailed case studies, including cases brought against toy manufacturer Hasbro and the Apple ebook case, illustrate the economic framework and legal strategies discussed. 
 
The authors identify three types of hub-and-spoke cartels: when an upstream firm facilitates downstream firms to coordinate on higher prices; when a downstream intermediary facilitates upstream suppliers to coordinate on higher prices; and when a downstream firm facilitates upstream suppliers to exclude a downstream rival. They devote a chapter to each type, discussing the formation, coordination, enforcement, efficacy, and prosecution of these cartels, and consider general lessons that can be drawn from the case studies. Finally, they present strategies for prosecuting hub-and-spoke collusion. The book is written to be accessible to both economists and lawyers, and is intended for both scholars and practitioners. 
 

Luke Garrod is Senior Lecturer in Economics at the School of Business and Economics at Loughborough University in the UK. Joseph E. Harrington, Jr., is Patrick T. Harker Professor at the Wharton School of the University of Pennsylvania and author of The Theory of Collusion and Competition Policy (MIT Press) and other books. Matthew Olczak is a Senior Lecturer in Economics at Aston University in the UK.

Preface
1: Introduction
1.1: What Is a Hub-and-Spoke Cartel?
1.2: Why Study Hub-and-Spoke Cartels?
1.3: Approach and Overview
2: General Analysis of Hub-and-Spoke Collusion
2.1: Collusion Requires Participation, Stability, and Coordination
2.2: Participation, Stability, and Coordination Conditions for a Hub-and-Spoke Cartel
2.3: Summary and Final Remarks
3: Collusion to Raise Downstream Prices: Upstream Supplier as Hub
3.1: Economic Framework
3.2: Cases
3.3: General Lessons
3.4: Appendix: Sugar (Canada)
3.5: Technical Appendix
4: Collusion to Raise Downstream Prices: Downstream Intermediary as Hub
4.1: Economic Framework
4.2: Cases
4.3: General Lessons
5: Collusion to Exclude Rival Firms
5.1: Economic Framework
5.2: Cases
5.3: General Lessons
5.4: Appendix: Automobile Retailing—General Motors (US)
5.5: Technical Appendix
6: General Assessment of Hub-and-Spoke Cartels
6.1: Cartel Formation
6.2: Cartel Operations
6.3: Cartel Efficiency
7: Competition Law and Hub-and-Spoke Collusion
Notes
References
Index