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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 11, 2011 Abstract: How many cartels are there? The answer is important in assessing the need for 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. We take the model to data from a period of legal cartels - Finnish manufacturing industries 1951-1990. Our estimates suggest that once born, cartels are persistent; by the end of the period, almost all industries were cartellized. Our model may be extended to identify key policy parameters from data generated under different competition policy regimes.
Number of Pages in PDF File: 56 Keywords: antitrust, cartel, competition, detection, Hidden Markov models, illegal, legal, policy, registry JEL Classification: L0, L4, L40, L41, L60 working papers seriesDate posted: June 22, 2011Suggested CitationContact Information
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