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by vijayboyapati 4529 days ago
This illustrates a simple idea in economics: cartels are hard to maintain because participants will look out for their own self-interest.
3 comments

I don't know the literature, and what assumptions they make in there, but out in the real world the lightbulb cartel lasted from 1924 till 1942 or thereabouts. The keyword to look for is "Phoebus Cartel". Also, recently in the news: the Silicon Valley wage-fixing cartel.

They may be hard to maintain, but they do spring up and may exert power while alive.

Phoebus was indeed established in 1924 but:

1) There is a scientific basis for the 10.000 hours, the "greatest" achievement generally attributed to Phoebus[1]:

    > For a supply voltage V near the rated voltage of the lamp:
    
        Light output is approximately proportional to V 3.4
        Power consumption is approximately proportional to V 1.6
        Lifetime is approximately proportional to V −16
        Color temperature is approximately proportional to V 0.42[88]
2) According wikipedia (and this page: http://www.uwcc.wisc.edu/icic/def-hist/history/famous.html )[2]:

    > In the late 1920s a Swedish-Danish-Norwegian union of companies
    (the North European Luma Co-op Society) began planning an independent
    manufacturing centre. Economic and legal threats by Phoebus did not
    achieve the desired effect, and in 1931 the Scandinavians produced and
    sold lamps at a considerably lower price than Phoebus.
[1] http://en.wikipedia.org/wiki/Lightbulb#Light_output_and_life...

[2] http://en.wikipedia.org/wiki/Phoebus_cartel#Demise

The Silicon Valley thing was no-poaching agreements between a few companies, not an explicit cartel. Which is bad but not nearly as bad.
Indeed, and by coincidence Izabella Kaminska published an interesting piece on why that's true with reference to cryptocurencies yesterday:

http://ftalphaville.ft.com/2014/01/24/1750472/why-its-tough-...

Really, though, we can only examine the sample space of failed cartels.