Abstract: Cartel Stability in the Electricity Industry: The Case of Electricity Distribution in Madrid in the Inter-War Period
The objective of this paper is to analyze the factors that led to cartel stability in the electricity industry in Madrid from 1913 to the Civil War. This electricity distribution cartel is of interest because it lasted for more than two decades. Among the factors that accounted for internal cartel stability were: similar economic power of the firms (market share and financial backing), the large number of small customers, the fact that demand exceeded supply, the revenue sharing, and regulation. Internal instability came mainly from cost asymmetry. Regulation played an important role in the cartel's achieving external stability, as did the neutralization of the gas company by the cartel's members.