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Cartel Damages to the Economy: An Assessment for Developing Countries

In: Competition Law Enforcement in the BRICS and in Developing Countries

Author

Listed:
  • Marc Ivaldi

    (Toulouse School of Economics
    CEPR)

  • Frédéric Jenny

    (ESSEC Business School)

  • Aleksandra Khimich

    (Toulouse School of Economics)

Abstract

The competition policy implementation and enforcement, including cartel deterrence and detection, require substantial investments. Therefore, it is important to understand to which extent these investments are compensated in terms of prevented damages to consumers. Answer to this question is especially important for developing countries for which decision to create or reinforce an antitrust authority largely depends on associated costs, while the sufficient and robust quantitative evaluation of potential benefits is still missing. The present study aims at providing the missing evidence by assessing the aggregate economic harm caused by cartels in developing countries. We find that economic damage of cartels already detected in developing countries is substantial—in terms of affected sales related to GDP the maximal rate reaches up to 6.38 %, while excess profits resulting from unjustified price overcharges reach up to 1 % when related to GDP. Furthermore, if one wants to take into account cartels that were not detected, the total damage appears at least four times larger.

Suggested Citation

  • Marc Ivaldi & Frédéric Jenny & Aleksandra Khimich, 2016. "Cartel Damages to the Economy: An Assessment for Developing Countries," International Law and Economics, in: Frederic Jenny & Yannis Katsoulacos (ed.), Competition Law Enforcement in the BRICS and in Developing Countries, pages 103-133, Springer.
    • Handle: RePEc:spr:intchp:978-3-319-30948-4_3
    DOI: 10.1007/978-3-319-30948-4_3
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    Citations

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    Cited by:

    1. Leone, Fabrizio & Macchiavello, Rocco & Reed, Tristan, 2022. "Market size, markups and international price dispersion in the cement industry," LSE Research Online Documents on Economics 117954, London School of Economics and Political Science, LSE Library.
    2. Macchiavello, Rocco & Leone, Fabrizio & Reed, Tristan, 2021. "The Falling Price of Cement in Africa," CEPR Discussion Papers 16253, C.E.P.R. Discussion Papers.
    3. World Bank, 2018. "Indonesia Economic Quarterly, December 2018," World Bank Publications - Reports 30969, The World Bank Group.
    4. Diego Jimenez-Hernandez & Enrique Seira, 2022. "Should the government sell you goods? Evidence from the milk market in Mexico," Working Paper Series WP 2023-19, Federal Reserve Bank of Chicago.

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