Economics 201

Case of the Day: The Global Lysine Price-Fixing Conspiracy



Read the article "The Global Lysine Price-Fixing Conspiracy of 1992-1995," by John M. Connor, Review of Agricultural Economics 19(2), Fall/Winter 1997, 412-427 (available through JSTOR at the link above) and briefly respond to the following questions.

Questions for analysis

1. What were the incentives for each of the companies in the conspiracy to cheat on the others and lower prices (or raise output)? What were the incentives against cheating?

2. The article lists several characteristics of industries that are prone to price-fixing and collusion. Which of these seem to be most important, both in general and in the case of ADM and its co-conspirators?

3. Comment on the way that the law treats damages for price-fixing and the way that these damages are estimated. How could the assessment of damages be made better?