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Empirical methodology for the evaluation of collusive behaviour in vertically-related markets: An application to the “yogurt cartel” in France

Céline Bonnet and Zohra Mechemache ()

International Review of Law and Economics, 2020, vol. 61, issue C

Abstract: The paper proposes a five-step methodology based on the estimation of demand and supply models to test the existence of manufacturers’ collusive behaviour and evaluate its impact on market and welfare. This methodology allows for the estimation of profit sharing in vertical chains by properly modelling the contracting stage between manufacturers and retailers. We apply this methodology to analyse the effects of the “yogurt cartel” that prevailed in the French dairy dessert market between private label providers during the period 2006–2012. We find that data supports collusive behaviour between private label manufacturers, and lead to average price increase varying from 7.3% and 11.3%, according to the product category. We found an umbrella effect on dairy products sold under national brands at the wholesale level but not at the retail level. The cartel benefits manufacturers both for the sales of the national brand and private label products, while retailers lost profits over the private label products but gained profits over the national brand products. The cartel implies a relatively low decrease in consumer welfare—lower than the gain for the industry—such that the overall welfare effect of the cartel is positive.

Keywords: Cartel; Private label; Bargaining; Profit sharing; Collusion (search for similar items in EconPapers)
JEL-codes: L13 L41 L66 (search for similar items in EconPapers)
Date: 2020
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Working Paper: Empirical methodology for the evaluation of collusive behaviour in vertically-related markets: an application to the "yogurt cartel" in France (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:61:y:2020:i:c:s0144818819300900

DOI: 10.1016/j.irle.2019.105872

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