Macroeconomic Effects of Market Structure Distortions: Evidence from French Cartels
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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.
Series:
Working Paper No. 2022/104
Subject:
Competition Demand elasticity Economic theory Financial markets Inflation Prices Production Productivity Total factor productivity
Frequency:
regular
English
Publication Date:
May 27, 2022
ISBN/ISSN:
9798400210686/1018-5941
Stock No:
WPIEA2022104
Pages:
85
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