Posted by D. Daniel Sokol
Rosa M. Abrantes-Metz, Global Economics Group, LLC; New York University – Leonard N. Stern School of Business – Department of Economics, John M. Connor, Purdue University; American Antitrust Institute (AAI), and Albert D. Metz, Moody’s Investors Service examine The Determinants of Cartel Duration
ABSTRACT: In this paper we model cartel duration as a mixed proportional hazard model and condition on cartel characteristics such as the agency first detecting the cartel, industry, if it is a bid rigging or price fixing cartel, the number of countries affected, the affected sales, and measures of the economic cycle and trend. Results are intuitive and fairly consistent across models, and conform well with theory and prior empirical work. We also found that the model results are sensitive to the presence of unobserved heterogeneity.
Among other results, we find that cartels first detected by United States or European Union agencies tend to be longer-lived, likely because those detected by other jurisdictions are primarily follow-ups of related larger and older cartels first uncovered in the United States or Europe. Bid rigging cartels tend to be longer-lived than others, while cartels distributed across geographies tend to be shorter-lived. Cartel durations are increasing in the size of a cartel’s affected sales and sanctions. Industries such as Petroleum & Coal, Finance & Insurance, and Food, Feed, Tobacco & Transportation have shorter-lived cartels, while industries such as Electronic Products have longer-lived cartels. The state of the economy can impact the duration of a cartel as well. Cartels where the leading firm has a market share of at least 40% have longer durations. However, the wide variation in the unobserved frailty factor suggests that additional, significant covariates remain unaccounted for in our information set.
Featured News
Google and South Carolina Clash Over State Records Demand
May 8, 2024 by
CPI
Telefonica Germany Teams Up with Amazon Web Services to Migrate 5G Customers
May 8, 2024 by
CPI
Federal Judge Grants $7.4 Million Settlement in Pork Price-Fixing Case
May 8, 2024 by
CPI
Wilson Sonsini Bolsters Antitrust and Competition Practice with Key Partner Returns
May 8, 2024 by
CPI
EU to Scrutinize Telecom Italia’s Network Sale to KKR
May 8, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – Economics of Criminal Antitrust
Apr 19, 2024 by
CPI
Navigating Economic Expert Work in Criminal Antitrust Litigation
Apr 19, 2024 by
CPI
The Increased Importance of Economics in Cartel Cases
Apr 19, 2024 by
CPI
A Law and Economics Analysis of the Antitrust Treatment of Physician Collective Price Agreements
Apr 19, 2024 by
CPI
Information Exchange In Criminal Antitrust Cases: How Economic Testimony Can Tip The Scales
Apr 19, 2024 by
CPI