Abstract

FLOREZ ACOSTA, Jorge  and  GOMEZ PORTILLA, Karoll. An empirical analysis of price collusion: Lessons for Colombia. Ens. polit. econ. [online]. 2017, vol.35, n.84, pp.222-244. ISSN 0120-4483.  https://doi.org/10.1016/j.espe.2017.11.001.

This paper empirically examines the economic effects of the so-called the baby diapers cartel in Colombia. We use data on quantities sold and unit prices of diapers at the region level in the period 2004-2016, and we carry out two exercises: first, following the line of analysis of the Colombian competition authority, we use time-series methods to analyze market prices between 2004 and 2016. Results suggest mixed evidence on the impact of the collusive behavior on the market. In a second exercise, we estimate a structural model of supply and demand that allows us to regain marginal costs and price-cost margins of the firms in the industry. Based on simulations of counterfactual scenarios ranging from more intense competition to perfect collusion, we show that the industry numbers in the cartel period are closer to a competitive scenario rather than to a collusive one. Our results suggest that a coordination failure between the firms in the cartel may have taken place.

JEL classification: L1, L4, L6, C3.

Keywords : Collusion; Cartels; Market power; Time series analysis; Structural estimation of demand.

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