Modelling the Birth and Death of Cartels with an Application to Evaluating Competition Policy

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Business Economics and Public Policy Papers
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Business
Economics
Public Affairs, Public Policy and Public Administration
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Harrington, Joseph E
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One of the primary challenges to measuring the impact of antitrust or competition policy on collusion is that the cartel population is unobservable; we observe only the population of discovered cartels. To address this challenge, a model of cartel creation and dissolution is developed to endogenously derive the populations of cartels and discovered cartels. With this theory, one can infer the impact of competition policy on the population of cartels by measuring its impact on the population of discovered cartels. In particular, changes in the duration of discovered cartels can be informative in assessing whether a new policy is reducing the latent rate of cartels.

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2009-12-01
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Journal of the European Economic Association
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At the time of publication, author Joseph E. Harrington was affiliated with John Hopkins University. Currently, he is a faculty member at the Business, Economics and Public Policy Department at the University of Pennsylvania.
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