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Econometric Tools for Detection of Collusion Equilibrium in the Industry

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  • Sylwester Bejger

    (Nicolaus Copernicus University in Torun)

Abstract

The article presents the notion of detection of overt or tacit collusion equilibrium in the context of choice of the appropriate econometric method, which is determined by the amount of information that the observer possesses. There has been shown one of the collusion markers coherent with an equilibrium of the proper model of strategic interaction – the presence of structural disturbances in the price process variance for phases of collusion and competition. The Markov Switching Model with switching of variance regimes has been proposed as a proper theoretical method detecting that type of changes without prior knowledge of switching moments. In order to verify the effectiveness of the method it has been applied to a series of lysine market prices throughout and after termination of its manufacturers’ collusion.

Suggested Citation

  • Sylwester Bejger, 2009. "Econometric Tools for Detection of Collusion Equilibrium in the Industry," Dynamic Econometric Models, Uniwersytet Mikolaja Kopernika, vol. 9, pages 27-38.
    • Handle: RePEc:cpn:umkdem:v:9:y:2009:p:27-38
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    References listed on IDEAS

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    1. Connor, John M., 1997. "Archer Daniels Midland: Price Fixer To The World," Staff Papers 28653, Purdue University, Department of Agricultural Economics.
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    6. Abrantes-Metz, Rosa M. & Froeb, Luke M. & Geweke, John & Taylor, Christopher T., 2006. "A variance screen for collusion," International Journal of Industrial Organization, Elsevier, vol. 24(3), pages 467-486, May.
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    9. Bolotova, Yuliya & Connor, John M. & Miller, Douglas J., 2008. "The impact of collusion on price behavior: Empirical results from two recent cases," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1290-1307, November.
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    Cited by:

    1. Sylwester Bejger, 2015. "Investigation Of The Nature Of Strategic Interactions In The Polish Wholesale Fuel Market: Statistical Analysis Of A Market Structure And A Price Mechanism," Acta Universitatis Nicolai Copernici, Ekonomia, Uniwersytet Mikolaja Kopernika, vol. 46(1), pages 77-95.
    2. Bejger, Sylwester, 2012. "Cartel in the Indian cement industry: An attempt to identify it," Economics Discussion Papers 2012-18, Kiel Institute for the World Economy (IfW Kiel).

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