Cartel in the Indian Cement Industry: An Attempt to Identify it

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Sylwester Bejger Nicholas Copernicus University of ToruńAbstract This article is devoted to the problem of the detection of overt or tacit collusion equilibrium in the context of the choice of the appropriate econometric method, a choice that is determined by the amount of information that the observer possesses. The author addresses this problem in two steps. First, to provide a theoretical background, he uses a collusion marker based on structural disturbances in a price process' variance. Then, he applies a Markov switching model with switching in variance regimes. He considers this method adequate and coherent with the problem structure and the research objective, and useful for assessing the functionality of the collusion marker he uses. He uses the model to examine the Indian cement industry in the period 1994-2009 and finds some objective indications of collusion and competition phases. These phases are confirmed by certain historical facts as well as by numerous research articles.JEL L13, L61, C22

Multimarket Linkages, Cartel Discipline and Trade Costs

“…This motivated us to push the analysis further by including two additional covariates, ∆%T RF F IN T RL and ∆%T RF F EXT RL, which are constructed as percentage changes in internal and external tariffs, respectively. The estimates in column (6) reveal that the changes in tariffs are not significant determinants of cartel discipline.…”

“…where λ ≥ 0 and µ ≥ 0 are the Lagrange multipliers associated with (ICC) and the non-negativity of internal trade constraint y ≥ 0, respectively. 14 The necessary first-order conditions (FOCs) for an interior solution to (6) are…”

“…4 Despite the prominent presence of international cartels in various industries, empirical research in the area remains limited. Most of the related literature focuses either on the determinants of cartel stability (Dick, 1996;Brenner, 2005;Connor and Zimmerman, 2005;Levenstein and Suslow, 2011;Zhou, 2012;and Connor et al, 2013), or on single episodes of collusion, where price and quantity data are readily available (Roller and Steen, 2006;Bejger, 2011Bejger, , 2012Harrington et al, 2015;and Connor, 2001). There are also a number of papers that provide a descriptive overview of different cartel practices and characteristics (Connor, 2003;Bolotova et al, 2008;Harrington, 2006; Suslow, 2006 and.…”

“…The welfare part of our analysis is related to Deltas et al (2012) who find that monopoly may enhance welfare by reducing costly cross-hauling. 6 However, this work differs in model specifics and orientation.…”

Long-run performance of an industry after broader reforms including privatization

“…Some of these studies includeZeidan and Resende (2009) andSalvo (2010) forBrazil, Hüschelrath and Veith (2013) for Germany,Rosenbaum and Sukharomana (2001) for the USA,Çelen and Gunalp (2010) for Turkey,Bejger (2012) for India,Steen and Sørgard (1999) for Norway, and Bejger (2011) for Poland.…”