Brian Woodall

The Logic of Collusive Action: The Political Roots of Japan's Dango System

Five conditions must be satisfied for effective and sustained collusive action to occur : a means for determining the composition of the conspiratorial ring, barriers to prevent opportunistic outsiders from undercutting its action, informal devices to ensure compliance, a mechanism for dividing the spoils, and some means of evading or coopting governement watchdogs. In this case study, the dangō system - a pervasive network of price-fixing cartels in Japans public construction market - thrives because it satisfies these conditions. This higly structured system is the logical corollary of a governement procurement system that delimits the arena of competition, a leakage-prone ceiling price, widespread reemployment of ex-bureaucrats in the private sector, lax antimonopoly enforcement, and influential patrons in the political world.