Assessment and forecasting of the likelihood of tacit collusion in oligopolistic markets

I. Ivanovskaya M. Dragun

Economy and Forecasting, 2012, issue 3, 119-134

Abstract: The article is devoted to a methodological framework to identify and prevent price collusions on the commodity markets. The main research methods are mathematical modeling and hypothesis testing. Our results are original in several ways. We developed a method of quantitative analysis and prediction of the time stability of the producers' concerted action on the prices in the commodity markets, which can predispose oligopolistic product markets to the emergence of price fixing and to develop measures to curb the producers' anticompetitive practices. The novelty of the method lies in the fact that we have identified a list of internal and external factors and the likelihood of collusion sustainability, indicators to assess their value as well as theoretically proved the formula for calculating the thresholds discount factor. The article presents the results of testing the method on the example of Belarus chipboard market. It is established that, in the researched period, the market had a high propensity for the emergence of coordinated actions on prices. Based on the analysis of social welfare losses due to the presence in the market price collusion, we have concluded that there is no need for its antitrust regulation, as the collusion between the chipboard manufacturers will be greatly destabilized as a result of the state's economic policy.

Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:eip:journl:y:2012:i:3:p:119-134

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