THE SOCIAL-ORGANIZATION OF CONSPIRACY - ILLEGAL NETWORKS IN THE HEAVYELECTRICAL-EQUIPMENT INDUSTRY

We analyze the social organization of three well-known price-fixing co nspiracies in the heavy electrical equipment industry. Although aspect s of collusion have been studied by industrial organization economists and organizational criminologists, the organization of conspiracies h as remained virtually unexplored Using archival data, we reconstruct t he actual communication networks involved in conspiracies in switchgea r, transformers, and turbines. We find that the structure of illegal n etworks is driven primarily by the need to maximize concealment, rathe r than the need to maximize efficiency. However network structure is a lso contingent on information-processing requirements imposed by produ ct and market characteristics. Our individual-level model predicts ver dict (guilt or innocence), sentence, and fine as functions of personal centrality in the illegal network, network structure, management leve l, and company size.