Reliable estimates of crime detection probabilities could help in designing better sanctions and improve our understanding of the efficiency of law enforcement. For cartels, we only have limited knowledge on the rate at which these illegal practices are discovered. In comparison to previous works, this paper offers a more parsimonious and simple-to-use method to estimate time-dependent cartel discovery rates, while allowing for heterogeneity across firms. It draws on capture-recapture methods that are frequently used in ecology to make inferences on various wildlife population characteristics. An application of this method provides evidence that less than a fifth of cartelising firms are discovered. 1 For the purposes of this paper, detection rate is used synonymously with the probability of cartel discovery. 2 For example, an increase in the number of cases from year t to year t + 1 paired with constant detection rate would mean reduced deterrence. 22 According to the US Department of Justice (2002), price fixers tend to be recidivists (http://www.justice.gov/atr/public/ speeches/224389.htm). This is also confirmed by Connor (2010), who finds a recidivist rate that had grown to around 20% by 2009; this is roughly in line with the survival rates of this paper (0.25 Â 0.9 = 0.225%). 23 As explained earlier, these death rates do not include the temporary breakdown of cartels. 24 'Death' means not seen again in the sampling period. It is possible that the same cartels would show up on the radar again in the future. 25 Connor (2010) also points out that recidivism rate is very likely higher than the one observed, i.e. some firms carry on cartelising but as part of the uncaptured sub-population.
Evaluations of the consumer harm caused by cartels are typically partial because they do not attempt to quantify the impact of deterrence, or acknowledge that the CA does not root out all anti-competitive cases. This paper proposes a broader framework for evaluation which encompasses these unobserved impacts. Calibration of this framework is challenging because one cannot rely on estimates for cases which have been observed to make deductions about those that have not -an example of the classic sample selection problem which is endemic across much of the empirical Industrial Organisation literature. However, we show how empirical findings, already available in the existing literature, can be plugged into a Monte Carlo experiment to establish bound estimates on the magnitudes of cartel-induced consumer harm. Lower bound (i.e. cautious) estimates suggest that (i) the harm detected by the CA really is only the tip of the iceberg, accounting for only a small fraction (at most one sixth) of total potential harm; (ii) deterrence is at least twice as effective as detection as a means for removing harm; and (iii) undetected harm is at least twice as large as detected harm. Under less cautious, but very plausible, assumptions, all three effects could be much greater than this.
An increasing body of literature has highlighted the significant carbon impact of academic conferences. Our paper further adds to this growing body of evidence by introducing a newly assembled dataset from a sample of 263 economics conferences, including 55,006 presentations by 26,312 academics. First, we offer a detailed description of the travelling pattern of academics presenting their work at these conferences, and highlight the main differences between academics and institutions in different geographical regions. Academic conferences are intuitively linked to increased dissemination in the expectation that they boost various impact metrics. For this reason we look at the relative role of the distance travelled and the number of trips made to present each paper in driving the number of citations these papers receive. We present evidence that the number of trips matters for more citations but longer distances are only associated with higher citation numbers for European academics. The potential reasons behind this heterogeneity are discussed in detail. Our results offer support to recent evidence showing that higher carbon impact is not necessarily associated with enhanced academic outcomes.
This paper investigates the deterrent impact of anti-cartel enforcement. It is shown theoretically that if enforcement is effective in deterring and constraining cartels then there will be fewer cartels with low overcharges and fewer with high overcharges. This prediction provides an indirect method for testing whether the enforcement of competition law is effective. Using historical data on legal cartels to generate the counterfactual, we find significantly less mass in the tails of the overcharge distribution, compared to illegal cartels. This result is robust to controlling for confounding factors, and we interpret this as the first tentative confirmation of effective deterrence.
Abstract:Research by academics and competition agencies on evaluating competition policy has grown rapidly during the last two decades. This paper surveys the literature in order to (i) assess the fitness for purpose of the main quantitative methodologies employed, and (ii) identify the main undeveloped areas and unanswered questions for future research. It suggests that policy evaluation is necessarily an imprecise science and that all existing methodologies have strengths and limitations. The areas where the need is most pressing for further work include: understanding why Article 102 cases are only infrequently evaluated; the need to bring conscious discussion of the counterfactual firmly into the foreground; a wider definition of policy to include success in deterrence and detection. At the heart of the discussion is the impact of selection bias on most aspects of evaluation. These topics are the focus of ongoing work in the CCP. November 20102 JEL Classification: L40, K21
This paper presents a rare attempt to quantify the deterrent effect of anticartel policy. It develops a conceptual framework, which establishes the sort of information necessary for such quantification. This is then illustrated and calibrated by drawing upon existing literatures and using evidence from legal cartels to approximate what would be observed absent policy. Measuring impact by the proportion of all potential harm that is deterred, our best estimate is two‐thirds and, even on conservative assumptions, at least half of all harms (or seven times the detected harm) is deterred. (JEL H11, K21, L44)
In this review of retrospective European merger studies we provide a discussion of the price effect of analysed mergers and examine whether the antitrust agency made the right decisions. We find that remedied mergers, on average, were not followed by a price-increase, suggesting that, in our sample, merger interventions were effective at eliminating problems. High market concentration was more likely to lead to higher post-merger prices, although remedies were able to reduce post-merger price-increases, even in concentrated markets. We look at a number of reasons why prices may increase post-merger and find little evidence of genuine agency errors.
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