Collusion and price wars in the Australian Coal Industry during the late nineteenth century

This essay examines the behaviour of coal mining companies in late nineteenth-century Australia in light of recent research on strategic firm behaviour. The Northern Collieries vend explored a number of institutional arrangements designed to increase the amount of public information and raise the costs of cheating. Output apportioning and profit redistribution schemes were employed to increase the costs to any individual firm of over-production. Wage contracts between the coal mining union and collieries included a sliding-scale component linked to the cartel price; the union was an important monitoring agent increasing the amount of public information on firm behaviour. Periodic price wars involved chiselling on the cartel price and bargaining behaviour to influence future agreements.