Hub and Spoke Cartels: Theory and Evidence from the Grocery Industry

Numerous recently uncovered cartels operated along the supply chain, with firms at one end facilitating collusion other – hub-and-spoke arrangements. These are hard to rationalize because they induce double marginalization and higher costs. We examine Canada’s alleged bread cartel provide first comprehensive analysis of collusion. make three contributions: i) Using court documents pricing data we evidence that existed both ends ii) show was effective, increasing inflation by about 40% iii) a model explaining why this form arose.