Sustainability of collusion: Evidence from the late 19th century basque iron and steel industry

We examine the minutes of the executive committees of two Basque firms in the iron and steel industry, Altos Hornos de Bilbao and Vizcaya, to discuss the relevance of different factors on the survival and failure of the collusive agreements reached in the industry from 1886 to 1901. We observe intense communication among colluding parties during and after collusive arrangements. Collusion seems to be more likely to break down in periods of falling demand, while strong demand provides these agreements with stability. Additionally, the presence of centralized sales agencies, and similar degrees of vertical integration among colluding firms facilitate collusion.