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A tip of the iceberg? The probability of catching cartels

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  • Peter L Ormosi

    (Centre for Competition Policy and Norwich Business School, University of East Anglia)

Abstract

Reliable estimates of crime detection rates could help design better sanctions and improve our understanding of the efficiency of law enforcement. For cartels, insufficient knowledge on the rate of discovery has hindered effective enforcement in the past. In comparison to previous works, this paper offers a more parsimonious and simple-to-use method to estimate time dependent cartel discovery rates, whilst allowing for heterogeneity across firms and markets. It draws on capture-recapture methods, similar to those used to make inferences on various wildlife population characteristics in ecology. An application of this method provides evidence that less than one fifth of all cartels are discovered.

Suggested Citation

  • Peter L Ormosi, 2011. "A tip of the iceberg? The probability of catching cartels," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2011-06, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    • Handle: RePEc:uea:ueaccp:2011_06
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    References listed on IDEAS

    as
    1. Bryant, Peter G & Eckard, E Woodrow, Jr, 1991. "Price Fixing: The Probability of Getting Caught," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 531-536, August.
    2. Matthew B. Krepps, 1997. "Another Look At The Impact Of The National Industrial Recovery Act On Cartel Formation And Maintenance Costs," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 151-154, February.
    3. Joseph E. Harrington & Myong-Hun Chang, 2009. "Modeling the Birth and Death of Cartels with an Application to Evaluating Competition Policy," Journal of the European Economic Association, MIT Press, vol. 7(6), pages 1400-1435, December.
    4. Shirley Pledger & Kenneth H. Pollock & James L. Norris, 2003. "Open Capture-Recapture Models with Heterogeneity: I. Cormack-Jolly-Seber Model," Biometrics, The International Biometric Society, vol. 59(4), pages 786-794, December.
    5. Joseph E. Harrington, Jr, 2011. "When is an antitrust authority not aggressive enough in fighting cartels?," International Journal of Economic Theory, The International Society for Economic Theory, vol. 7(1), pages 39-50, March.
    6. Nathan H. Miller, 2009. "Strategic Leniency and Cartel Enforcement," American Economic Review, American Economic Association, vol. 99(3), pages 750-768, June.
    7. Madhavan, Ananth N & Masson, Robert T & Lesser, William H, 1994. "Cooperation for Monopolization? An Empirical Analysis of Cartelization," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 161-175, February.
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    Cited by:

    1. Merino Troncoso, Carlos, 2020. "Estimación Máximo Verosímil y Bayesiana de la Probabilidad de Detección [Maximum Likelihood and Bayesian Estimation of Detection Probabilities]," MPRA Paper 110264, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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