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

Authors


  • We express our appreciation for the comments of three anonymous referees and seminar participants at Wharton-BEPP and the Antitrust Division of the US Department of Justice, and thank Rui Ota for collecting the data. The financial support of the National Science Foundation (SES-1148129) is gratefully acknowledged.

Abstract

Estimates of average cartel duration and the annual probability of cartel death are based on data for discovered cartels. It is recognised 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 article constructs a birth-death-discovery process to investigate the source and direction of possible biases. Bayesian inference is used to provide bounds on the extent of the bias and deliver an improved set of beliefs on the probability of cartel death.

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