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Cartels, Managerial Incentives, and Productive Efficiency in German Coal Mining, 1881–1913

Published online by Cambridge University Press:  01 June 2009

Carsten Burhop  and
Thorsten Lübbers
Carsten Burhop*
Affiliation:
Heisenberg-Fellow Max Planck Institute for Research on Collective Goods, Kurt-Schumacher-Straβe 10, 53113 Bonn, Germany. E-mails: burhop@coll.mpg.de.
Thorsten Lübbers*
Affiliation:
Research Fellow Max Planck Institute for Research on Collective Goods, Kurt-Schumacher-Straβe 10, 53113 Bonn, Germany. E-mails: luebbers@coll.mpg.de.
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Abstract

Managerial firms and cartels were central components of the German economy during the late nineteenth and early twentieth century. Based on stochastic frontier regressions, we show for a sample of coal mining corporations and the period 1881–1913 that cartelization did not affect productive efficiency. Bonuses paid to board members, however, did increase the efficiency of coal mining firms. Thus, one pillar of the German economic model did not negatively affect economic efficiency, whereas another pillar had a positive impact. Furthermore, our results suggest that coal was mined with slightly decreasing returns to scale.

Type
ARTICLES
Information
The Journal of Economic History , Volume 69 , Issue 2 , June 2009 , pp. 500 - 527
Copyright
Copyright © The Economic History Association 2009

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