Cartel Screening in the Brazilian Fuel Retail Market

20 Pages Posted: 18 Jul 2019

See all articles by Douglas Silveira

Douglas Silveira

Federal University of Juiz de Fora; University of Alberta; Pontifical Catholic University of Rio de Janeiro (PUC-Rio)

Silvinha Vasconcelos

Universidade Federal de Juiz de Fora - Department of Economics

Paula Bogossian

Independent

Joaquim Henriques Vianna Neto

Universidade Federal de Juiz de Fora

Date Written: July 10, 2019

Abstract

We aim to contribute to the challenges faced by the antitrust authorities in the identification process of anti-competitive market behavior. We propose two econometric models to select possible cases to be investigated: (i) The Markov-Switching GARCH (MSGARCH) Models; (ii) The Local Gaussian Correlation (LGC) approach. We compare both models. Our results indicate that the LGC model, based on the correlation of the resale price margin and the variability of prices, may provide a biased estimation of the likelihood that a market is practicing cartel. The MSGARCH model, based only on the log deviation of the gasoline sale price, showed a better accuracy in cartel detection.

Keywords: cartel filter, price dynamics, fuel retail market

JEL Classification: L41, L95, C22, C63

Suggested Citation

Silveira, Douglas and Vasconcelos, Silvinha and Bogossian, Paula and Henriques Vianna Neto, Joaquim, Cartel Screening in the Brazilian Fuel Retail Market (July 10, 2019). Available at SSRN: https://ssrn.com/abstract=3421185 or http://dx.doi.org/10.2139/ssrn.3421185

Douglas Silveira (Contact Author)

Federal University of Juiz de Fora ( email )

Juiz de Fora, Minas Gerais
Brazil

University of Alberta ( email )

Edmonton, Alberta T6G 2R6
Canada

Pontifical Catholic University of Rio de Janeiro (PUC-Rio) ( email )

Rua Marquas de Sao Vicente, 225
Rio De Janeiro, RJ 22453-900
Brazil

Silvinha Vasconcelos

Universidade Federal de Juiz de Fora - Department of Economics

Juiz de Fora, Minas Gerais
Brazil

Paula Bogossian

Independent ( email )

No Address Available

Joaquim Henriques Vianna Neto

Universidade Federal de Juiz de Fora ( email )

Campus
Juiz de Fora, Minas Gerais
United States

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