Cartel birth and death dynamics: Empirical evidence

Tove Forsbacka, Chloe Le Coq and Catarina Marvao ()

International Journal of Industrial Organization, 2023, vol. 89, issue C

Abstract: This paper examines how a gradual tightening of antitrust enforcement impacts cartels’ births and deaths. To avoid the inherent sample selection bias in prosecuted cartel studies, we use a unique dataset of Swedish legal cartels registered between 1946 and 1993. We compare estimates from a count model (considering only registered cartels) and a Hidden Markov Model (allowing for potentially unregistered cartels) to identify observed and hidden cartel dynamics. The count model suggests that strengthening antitrust enforcement has a deterrent effect, but the Hidden Markov Model suggests otherwise. Despite stricter competition laws and a credible threat of cartel prohibition, cartels continue to form, but do so undercover. Additionally, our results suggest that the strengthening of competition law has little impact on destabilizing existing cartels.

Keywords: Cartels; Legal contracts; Competition policy; Antitrust (search for similar items in EconPapers)
JEL-codes: D43 K21 L12 L13 L41 L60 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:89:y:2023:i:c:s0167718723000140

DOI: 10.1016/j.ijindorg.2023.102932

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