What Can the Duration of Discovered Cartels Tell Us About the Duration of All Cartels?

44 Pages Posted: 18 Nov 2014 Last revised: 10 Apr 2015

See all articles by Joseph E. Harrington Jr

Joseph E. Harrington Jr

University of Pennsylvania

Yanhao 'Max' Wei

University of Southern California - Marshall School of Business

Date Written: April 9, 2015

Abstract

Estimates of average cartel duration and the annual probability of cartel death are based on data for discovered cartels. It is recognized that these estimates could be biased because the population of discovered cartels may not be a representative sample of the latent population of cartels. This paper constructs a birth-death-discovery process to theoretically investigate the source and direction of possible biases. The model is then estimated and Bayesian inference is used to provide bounds on the extent of the bias and deliver an improved estimate of the probability of cartel death.

Keywords: Cartel detection, Collusion, Antitrust

JEL Classification: L1, L4

Suggested Citation

Harrington Jr, Joseph E. and Wei, Yanhao, What Can the Duration of Discovered Cartels Tell Us About the Duration of All Cartels? (April 9, 2015). PIER Working Paper No. 14-042, Available at SSRN: https://ssrn.com/abstract=2526324 or http://dx.doi.org/10.2139/ssrn.2526324

Joseph E. Harrington Jr

University of Pennsylvania ( email )

Philadelphia, PA 19102
Philadelphia, PA 19104

Yanhao Wei (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States

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