IMF Working Papers

Macroeconomic Effects of Market Structure Distortions: Evidence from French Cartels

By Flavien Moreau, Ludovic Panon

May 27, 2022

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Flavien Moreau, and Ludovic Panon. Macroeconomic Effects of Market Structure Distortions: Evidence from French Cartels, (USA: International Monetary Fund, 2022) accessed November 21, 2024

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Summary

We provide systematic evidence on cartels’ characteristics, using novel data on cases investigated by the French Competition Authority. These practices are widely spread across sectors and cartel members are typically among the top firms in their industries. In a model with heterogeneous firms and collusion, cartels amplify misallocation by charging supracompetitive markups. Breaking down French cartels would increase aggregate productivity by 2%, welfare by 3.5%, bringing the economy 37% closer to the efficient frontier. These numbers shed light on the aggregate importance of collusion.

Subject: Competition, Demand elasticity, Economic theory, Financial markets, Inflation, Prices, Production, Productivity, Total factor productivity

Keywords: Cartel member, Cartels, Characteristics of cartel, Collusion, Competition, Demand elasticity, Europe, Global, Inflation, Market structure distortion, Markup dispersion, Misallocation, Productivity, Systematic evidence, Total factor productivity, Welfare

Publication Details

  • Pages:

    85

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2022/104

  • Stock No:

    WPIEA2022104

  • ISBN:

    9798400210686

  • ISSN:

    1018-5941