The Impact of Collusion on Price Behavior: Empirical Results from Two Recent Cases

38 Pages Posted: 11 Jun 2007

See all articles by Yuliya Bolotova

Yuliya Bolotova

University of Idaho

John M. Connor

Purdue University; American Antitrust Institute (AAI)

Douglas J. Miller

University of Missouri at Columbia - Department of Economics

Date Written: October 2006

Abstract

We use extended ARCH and GARCH models to examine the differences in the behavior of the first two moments of the price distribution during collusive and competitive phases of two recently discovered conspiracies, citric acid and lysine. According to our results, the conspirators managed to raise prices by 9 and 25 cents per pound in the short-run relative to non-collusive periods. Also, the variance of prices during the lysine conspiracy was lower and the variance of prices during the citric acid conspiracy was higher than during more competitive periods. The proposed methodology may be used for antitrust screening and prosecution purposes.

Keywords: cartels, citric acid, GARCH, lysine, overcharge, price, variance screen

JEL Classification: K21, L1, L2, L4, L6

Suggested Citation

Bolotova, Yuliya and Connor, John M. and Connor, John M. and Miller, Douglas J., The Impact of Collusion on Price Behavior: Empirical Results from Two Recent Cases (October 2006). Available at SSRN: https://ssrn.com/abstract=991908 or http://dx.doi.org/10.2139/ssrn.991908

Yuliya Bolotova (Contact Author)

University of Idaho ( email )

875 Perimeter Drive
Moscow, ID 83844
United States

John M. Connor

Purdue University ( email )

333 Massachusetts Ave.
UNIT 505
Indianapolis, IN 46204
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+1 463-221-1692 (Phone)

American Antitrust Institute (AAI) ( email )

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202-536-3408 (Phone)

HOME PAGE: http://www.antitrustinstitute.com

Douglas J. Miller

University of Missouri at Columbia - Department of Economics ( email )

118 Professional Building
Columbia, MO 65211
United States

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