Recurrent Collusion: Cartel Episodes and Overcharges in the South African Cement Market

Willem Boshoff and Rossouw van Jaarsveld ()

Review of Industrial Organization, 2019, vol. 54, issue 2, No 7, 353-380

Abstract: Abstract Cartel cases may involve recurrent collusion, with cartel periods interspersed by periods of greater competition. An empirical model of recurrent collusion must account for different data generating processes during collusive and non-collusive episodes and allow for the dating of such episodes. It should also allow for the possibility of flexible transitions between collusive and non-collusive episodes. This paper proposes a Markov regime-switching model to detect recurrent periods of collusive damages and to estimate cartel effectiveness in any given time period. We use this information to estimate overcharges, which we show are much higher than those suggested by conventional approaches.

Keywords: Cement cartel; Collusion detection; Markov-switching; Overcharge estimation; Recurrent collusion (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s11151-018-9637-9

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