Rapid increases and unpredictable fluctuations in gas prices annoy many drivers, especially since it may seem that oil companies are secretly conspiring to keep prices high by forming a cartel in an effort to increase their profits. But a new study shows that cartel-like price dynamics of certain commodities, such as gasoline, can emerge spontaneously in a strategic model without any collusion among the sellers. The finding doesn’t necessarily mean that companies don’t intentionally form cartels, but the possibility of self-organized cartel formation could have implications for market regulations.
The researchers, physicists Tiago P. Peixoto and Stefan Bornholdt of the University of Bremen in Bremen, Germany, have published their study, called “No Need for Conspiracy: Self-Organized Cartel Formation in a Modified Trust Game,” in a recent issue of Physical Review Letters.
“Our work shows that, under very reasonable and simple assumptions of the market dynamics, cartel-like behavior can emerge, without an explicit agreement between sellers,” Bornholdt told Phys.org. “This is, to our knowledge, completely new and we feel that it comes somewhat unexpected, for example in the context of German gasoline price discussions in the media. For example, a few months ago, the German governmental cartel agency searched the offices of large gasoline companies in search of evidence of cartel behavior. We asked ourselves if a cartel-like dynamics could emerge by itself, without leaving traces of evidence. As gas prices in Germany were – and still are – strongly fluctuating in time and space, this made us curious whether this could be a sign for an interesting collective dynamics, of gas sellers, interacting with each other in a funny way.”
High gas prices may be explained by self-organized cartel behavior
Hmmm... I wonder who funded that study?
Right, it's all some spontaneous, unpredictable, magical creature with a mind of it's own.
Oh what a tangled web we weave, when first we practice to deceive.
