This article puts forward two central arguments. First, we can better understand racial exclusion if we describe it as the anti-competitive work of racial cartels. During Jim Crow, whites united under the banner of white supremacy to exclude non-whites from key markets--labor, education, housing and politics, among others. Racially homogenous groups--like homeowners’ associations, school boards, trade unions, citizens’ councils, and real estate boards--worked together to anti-competitively exclude nonwhite groups, and thereby gained an unfair advantage. Describing this conduct as cartel conduct emphasizes the profitability and the collective nature of racism that conventional narratives do not.
Second, this article argues that racial identity can play a key role in enforcing cartel agreements and in stabilizing the operation of racial cartels. Neoclassical economists dismiss anything resembling a cartel theory of discrimination because economic theory predicts that cartel members will always cheat. This article suggests that by providing internal incentives (like self-esteem and shame) to abide by cartel agreements, racial identity may have prevented racial cartel members from defecting.
Civil Rights and Discrimination | Law and Economics | Law and Society
Date of this Version
Daria Roithmayr, "Racial Cartels" (March 2007). University of Southern California Law and Economics Working Paper Series. Working Paper 66.