Brazil investigates price-fixing cartel

Cartels fail when producers don't control supply to maintain an artificially high price. Therefore a collusion is easier to achieve when there is a small number of firms in the market and a large number of customers market demand is not too variable. Then the individual firm's output can be easily monitored by a cartel organization. However price-fixing cartels are considered to be inherently unstable by some economist. Thus at some point they come under pressure and break down. Hence you will find a number of potential instability for price-fixing cartel arrangements such as a falling demand. This creates tensions between firms during an economic turndown or increase in market supply by the entry of a non-cartel firm putting a downward pressure on the cartel price. Also the exposure of illegal price-fixing by the government or other regulatory agencies could end the arrangement. Last of all a over-production and excess supply by cartel members could break the price-fixing. In the end all collusive agreements tend to fall eventually because the price-fixing is not a profit maximizing equilibrium for each individual firm.

Besides being cited, Mitsui of Japan is an insignificant player in Brazil. In the other hand, european companies dominate the market for decades. They win almost every bid open! Alstom, for example, is everywhere. Trains, subway, elevators, hydroeletric plants and the list goes on.

Living in Brazil, my way of seeing it is that most of the european companies are corrupt. And they are not punished! They are protected by the government. Some politicians win lots of money protected these companies. Also, these companies offer a very bad service and technology to our country.

BTW, recently Hiunday Heavy Industries won some bids to build trains... I would like to see more japanese companies here. Where are them? We have lots of japanese descendants living here, why Brazi is ignored by Japan?

@Fernando: I don't know where you're living, but I see Japanese brands everywhere I go. From Himistu plasters, to the huge Toyota plant near Sorocaba. Just on the street where I live, there are at least 10 Honda cars.