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Cartels Uncovered

  • Hyytinen, Ari
  • Steen, Frode
  • Toivanen, Otto

How many cartels are there? The answer is important in assessing the efficiency of competition policy. We present a Hidden Markov Model that answers the question, taking into account that often we do not know whether a cartel exists in an industry or not. Our model identifies key policy parameters from data generated under different competition policy regimes and may be used with time-series or panel data. We take the model to data from a period of legal cartels - Finnish manufacturing industries 1951 - 1990. Our estimates suggest that by the end of the period, almost all industries were cartelized.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7761.

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Date of creation: Mar 2010
Date of revision:
Handle: RePEc:cpr:ceprdp:7761
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