NBER Working Papers by Margaret Levenstein

For those who think of Cleveland as a decaying rustbelt city, it may seem difficult to believe that this northern Ohio port was once a hotbed of high-tech startups, much like Silicon Valley today. During the late nineteenth and early twentieth centuries, Cleveland played a leading role in the development of a number of second-industrial-revolution industries, including electric light and power, steel, petroleum, chemicals, and automobiles. In an era when production and inventive activity were both increasingly capital-intensive, technologically creative individuals and firms required greater and greater amounts of funds to succeed. This paper explores how the city's leading inventors and technologically innovative firms obtained financing, and finds that formal institutions, such as banks ...

We examine the possible effects of private international cartels on developing countries by looking in detail at three recent cartel cases, as well as at a broader cross-section of 42 recently prosecuted international cartels. We discuss the indirect effects on developing country producers, either as competitors or co-conspirators, as well the direct effects of cartels on developing country consumers. By combining trade data with a sample of US and European prosecutions of international cartels in the 1990s, we are able to estimate the order of magnitude of the consequences of these cartels on developing countries as consumers. In 1997, the latest year for which we have trade data, developing countries imported $54.7 billion of goods from a sub-sample of 19 industries that contained a p...

Bromine producers colluded to raise prices and profits during most of the period between 1885 and 1914. Collusion was punctuated by price wars in which prices fell sharply. The characteristics of these price wars are compared with those in the Green-Porter and Abreu- Pearce-Stachetti models. Some of the bromine price wars resulted from the imperfect monitoring problems in these models. Those price wars were short and mild. More severe price wars were part of a bargaining process, in which firms tried to force a renegotiation to a new collusive equilibrium with a different distribution of rents.

From 1885 to 1902 manufacturers and distributors in the American bromine industry cooperated to increase prices and profits. Like many sectors of the American economy at the time, the bromine industry was made up a large number of small manufacturers and a small number of national distributors. The manufacturers agreed to pool their output and sell only to two distributors. The distributors accumulated excess inventories rather than let the market price fall, but then used those inventories as a threat to deter cheating and new entry. Industry participants designed contracts to balance fluctuations in the costs and benefits from cheating. These contracts succeeded in stabilizing collusion until the entry of new, vertically integrated, mass production firm led to its demise.