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Cartels Uncovered

NHH Dept. of Economics Discussion Paper No. 10/2010

49 Pages Posted: 25 Mar 2010

See all articles by Ari Hyytinen

Ari Hyytinen

University of Jyväskylä

Frode Steen

NHH Norwegian School of Economics - Department of Economics

Otto Toivanen

Aalto University - Department of Economics; KU Leuven - Faculty of Business and Economics (FBE); CEPR; Helsinki Center of Economic Research (HECER)

Multiple version iconThere are 4 versions of this paper

Date Written: March 16, 2010

Abstract

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.

Keywords: Antitrust, cartel, competition, detection, Hidden Markov models.

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JEL Classification: L0, L4, L40, L41, L60.

Suggested Citation

Hyytinen, Ari and Steen, Frode and Toivanen, Otto, Cartels Uncovered (March 16, 2010). NHH Dept. of Economics Discussion Paper No. 10/2010, Available at SSRN: https://ssrn.com/abstract=1578126 or http://dx.doi.org/10.2139/ssrn.1578126

Ari Hyytinen

University of Jyväskylä ( email )

PO Box 35
Jyväskylä, 40014
Finland

HOME PAGE: http://www.jyu.fi

Frode Steen (Contact Author)

NHH Norwegian School of Economics - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway
+47 55 959 259 (Phone)
+47 55 959 543 (Fax)

Otto Toivanen

Aalto University - Department of Economics ( email )

PO Box 1210
FI-00101 Helsinki
Finland

KU Leuven - Faculty of Business and Economics (FBE) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

CEPR ( email )

London
United Kingdom

Helsinki Center of Economic Research (HECER)

FI-00014 Helsinki
Finland

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