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We have the pleasure to announce Chloé Le Coq (Paris 2, CRED) as the next speaker in our CERNA Research Seminar series. The seminar will take place on Wednesday 9/3/2022 at 16:00 in Salle Vendome, Mines ParisTech. The log-in information for the live stream on Zoom will also be provided in due course.
Chloé will talk about:
Cartel birth and death dynamics: empirical evidence
This paper examines how the legal and macroeconomic environments impact cartel births and deaths. We exploit the gradual tightening of the competition law to study how cartels react to increased competition pressure. To avoid the inherent sample selection bias in prosecuted cartel studies, we use a unique dataset covering the population of Swedish legal cartels registered between 1947 and 1993. We estimate both a count model that considers the registered cartels and a hidden Markov model, which accounts for the varying efficiency of the register in observing collusion. These two complementary approaches allow us to characterize the observed, and potentially hidden, dynamics of cartels. We find that strengthening the competition law has some deterrent effect. However, as the competition law becomes more severe (i.e., the cartel ban's threat becomes credible), cartels continue forming but are undercovered. We also show that volatility and high-interest rates hinder collusion (lowering births and increasing deaths).