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Industry Impact Of Cartels: Evidence From The Stock Market1

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  • Iwan Bos
  • Wilko Letterie
  • Nina Scherl

Abstract

This paper conducts an event study analysis to empirically assess the industry-wide impact of cartels. Using a sample of recent European cartel cases, we estimate the effect of the surprise inspection and final decision on the stock market value of cartel and noncartel firms. The overall effect of both events is negative for cartel members and statistically insignificant for noncartel members. However, the impact of the inspection is significantly negative for European noncartel suppliers and for noncartel suppliers in nonchemicals industries. This is consistent with the theory that cartels can create additional damages through positively affecting the performance of their competitors.

Suggested Citation

  • Iwan Bos & Wilko Letterie & Nina Scherl, 2019. "Industry Impact Of Cartels: Evidence From The Stock Market1," Journal of Competition Law and Economics, Oxford University Press, vol. 15(2-3), pages 358-379.
    • Handle: RePEc:oup:jcomle:v:15:y:2019:i:2-3:p:358-379.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhz017
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    Cited by:

    1. Koppenberg, Maximilian & Hirsch, Stefan & Finger, Robert, 2023. "Effects of the debate on glyphosate's carcinogenic risk on pesticide producers' share prices," Ecological Economics, Elsevier, vol. 212(C).
    2. Bovin, Andreas & Bos, Iwan, 2023. "Market Shares as Collusive Marker: Evidence from the European Truck Industry," Research Memorandum 011, Maastricht University, Graduate School of Business and Economics (GSBE).
    3. Napel, Stefan & Welter, Dominik, 2023. "Umbrella pricing and cartel size," International Journal of Industrial Organization, Elsevier, vol. 91(C).
    4. Aditya Bhattacharjea & Oindrila De, 2021. "India’s Cartel Penalty Practices, Optimal Restitution and Deterrence," IEG Working Papers 424, Institute of Economic Growth.

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