Macroeconomic Effects of Market Structure Distortions: Evidence from French Cartels

Flavien Moreau and Ludovic Panon

No 2022/104, IMF Working Papers from International Monetary Fund

Abstract: We provide systematic evidence on cartels’ characteristics, using novel data on cases investigated by the French Competition Authority. These practices are widely spread across sectors and cartel members are typically among the top firms in their industries. In a model with heterogeneous firms and collusion, cartels amplify misallocation by charging supracompetitive markups. Breaking down French cartels would increase aggregate productivity by 2%, welfare by 3.5%, bringing the economy 37% closer to the efficient frontier. These numbers shed light on the aggregate importance of collusion.

Keywords: Competition; cartels; collusion; welfare; misallocation; cartel member; market structure distortion; characteristics of cartel; systematic evidence; markup dispersion; Productivity; Demand elasticity; Total factor productivity; Inflation; Europe; Global (search for similar items in EconPapers)
Pages: 85
Date: 2022-05-27
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