Wednesday, October 27, 2010

Will this cartel survive?

Don Marron thinks the pact of silence will be broken because the incentive to cheat is huge:
the 33 miners agreed to a pact of silence in which none will speak about the details of the first 17 days of their ordeal. In addition, they struck an agreement to coordinate the telling of their story and to share equally the resulting profits.

In short, the Chilean miners formed a cartel. A justified and moral cartel to be sure — they deserve whatever profits they can jointly extract from their ordeal — but a cartel nonetheless.

All of which raises a natural question: Can such a cartel be successful? Or will it succumb to the perennial challenge that confronts all cartels: how to enforce a joint agreement in the face of individual temptations? A unified silence may well maximize the financial value of the story and defend the privacy of those moments that some miners do not want to share with the world. But the media circus will tempt some miners to cheat on that agreement either for monetary gain or to ensure that their individual perspective gets reported.

The key to forecasting the success of the cartel is to think about how the cartel would detect and punish cheaters. Unless they have a way to do this, I suspect it will break down.


  1. Sounds like they have a contract, at least under common law. I wonder if they have one under Chilean law.

  2. I think they should hire NCAA rules enforcers!