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Cartels UncoveredAri HyytinenUniversity of Jyväskylä - School of Business and Economics Frode SteenNorwegian School of Economics (NHH) - Department of Economics Otto ToivanenKU Leuven - Faculty of Business and Economics (FBE); CEPR March 16, 2010 NHH Dept. of Economics Discussion Paper No. 10/2010 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.
Number of Pages in PDF File: 49 Keywords: Antitrust, cartel, competition, detection, Hidden Markov models. JEL Classification: L0, L4, L40, L41, L60. working papers seriesDate posted: March 25, 2010Suggested CitationContact Information
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