TESTING FOR MARKET SHARE STABILITY AND CARTELS
Aitor Ciarreta Antuñano ()
Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)
One of the most challenging problems to applied industrial economists is the detection of colluding behavior in oligopolistic markets. In this paper we postulate how low market share variability may be used as a primary indicator of cartel success to maintain the agreed upon levels of production, after controlling from exogenous fluctuations in the economic environment and the market structure. To test this hypothesis we use a unique data set consisting of government-sanctioned cartels in Sweden from 1976 to 1990. The use of a measure of share stability is shown to be an interesting and potentially informative statistic for making comparisons when the cartel agreement is in effect and when it is absent. The conclusion supports our hypothesis that horizontal price fixing cartels are significantly associated with a lower instability than in its absence. The normative implication of the paper is that a measure of market share variability may provide a basic framework for antitrust authorities to call for attention on the possible existence of tacit collusion in industries with similar market structure but significant differences in market share stability.
Keywords: Industrial Organization; Antitrust Economics; Panel Data Analysis (search for similar items in EconPapers)
Pages: 35 pages
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2002-17
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