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Does Rigidity of Prices Hide Collusion?

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  • Juan Luis Jiménez

    () (Facultad de Economía, Empresa y Turismo, University of Las Palmas de Gran Canaria)

  • Jordi Perdiguero

    () (Faculty of Economics, University of Barcelona)

Abstract

Cartel detection is one of the most basic and most complicated tasks of competition authorities. In recent years, however, variance filters have provided a fairly simple tool for rejecting the existence of price-fixing, with the added advantage that the methodology requires only a low volume of data. In this paper we analyze two aspects of variance filters: (i) the relationship established between market structure and price rigidity, and (ii) the use of different benchmarks for implementing the filters. This paper addresses these two issues by applying a variance filter to a gasoline retail market characterized by a set of unique features. Our results confirm the positive relationship between monopolies and price rigidity, and the variance filter's ability to detect non-competitive behavior when an appropriate benchmark is used. Our findings should serve to promote the implementation of this methodology among competition authorities, albeit in the awareness that a more exhaustive complementary analysis is required.

Suggested Citation

  • Juan Luis Jiménez & Jordi Perdiguero, 2011. "Does Rigidity of Prices Hide Collusion?," IREA Working Papers 201120, University of Barcelona, Research Institute of Applied Economics, revised Oct 2011.
  • Handle: RePEc:ira:wpaper:201120
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    Citations

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    Cited by:

    1. Jordi López-Tamayo & Vicente Royuela & Jordi Suriñach, 2012. "“Building a “quality in work” index in Spain”," IREA Working Papers 201206, University of Barcelona, Research Institute of Applied Economics, revised Feb 2012.
    2. Daniel Albalate del Sol, 2013. "The institutional, economic and social determinants of local government transparency," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 16(1), pages 90-107, March.
    3. Ana María Osorio & Catalina Bolancé & Manuela Alcañiz, 2011. "Measuring early childhood health: a composite index comparing Colombian departments," IREA Working Papers 201122, University of Barcelona, Research Institute of Applied Economics, revised Oct 2011.
    4. Juan Luis Jiménez & Jordi Perdiguero, 2018. "Mergers and difference-in-difference estimator: Why firms do not increase prices?," European Journal of Law and Economics, Springer, vol. 45(2), pages 285-311, April.
    5. David Imhof & YAVUZ KARAGÖK & SAMUEL RUTZ, 2017. "Screening for Bid-rigging – Does it Work?," Working Papers 2017-09, CRESE.
    6. Jordi Perdiguero, 2011. "Vertical relations and local competition: an empirical approach," IREA Working Papers 201124, University of Barcelona, Research Institute of Applied Economics, revised Dec 2011.
    7. Ernest Miguélez & Rorina Moreno, 2012. "“What attracts knowledge workers? The role of space, social connections, institutions, jobs and amenities”," IREA Working Papers 201204, University of Barcelona, Research Institute of Applied Economics, revised Feb 2012.
    8. Belles-Sampera, Jaume & Merigó, José M. & Guillén, Montserrat & Santolino, Miguel, 2013. "The connection between distortion risk measures and ordered weighted averaging operators," Insurance: Mathematics and Economics, Elsevier, vol. 52(2), pages 411-420.
    9. Jordi Perdiguero & Juan Luis Jiménez, 2012. "“Policy options for the promotion of electric vehicles: a review”," IREA Working Papers 201208, University of Barcelona, Research Institute of Applied Economics, revised Mar 2012.
    10. Michael L Polemis & Panagiotis N Fotis, 2015. "Rent seeking oligopolistic behaviour in European gasoline markets," Economics Bulletin, AccessEcon, vol. 35(1), pages 827-833.
    11. Imhof, David, 2017. "Simple Statistical Screens to Detect Bid Rigging," FSES Working Papers 484, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    12. Juan Luis Jiménez & Jordi Perdiguero, 2013. "“One more lie: the ‘Monday effect’ in Spain’s retail petrol market”," IREA Working Papers 201324, University of Barcelona, Research Institute of Applied Economics, revised Dec 2013.
    13. Huber, Martin & Imhof, David, 2018. "Machine Learning with Screens for Detecting Bid-Rigging Cartels," FSES Working Papers 494, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    14. Imhof, David & Karagök, Yavuz & Rutz, Samuel, 2016. "Screening for bid-rigging - does it work?," FSES Working Papers 468, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.

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