Wednesday, January 9, 2008
Posted by D. Daniel Sokol
In an era with improved anti-cartel enforcement capacity among European countries and improved cross-country cooperation against cartels, Emmanuel Combe (Université Paris I Panthéon-Sorbonne, Department of Economics), Constance Monnier (Université Paris I Panthéon-Sorbonne, Department of Economics) and Renaud Legal suggest that it is harder to catch cartels now than ever before in Europe in their paper Cartels: The Probability of Getting Caught in the European Union. Does this mean that cartel members have gotten smarter?
ABSTRACT: In 1991, Bryant and Eckard estimated the annual probability that a cartel would be detected by the US Federal authorities, conditional on being detected, to be at most between 13% and 17%. 15 years later, we estimated the same probability over a European sample and we found an annual probability that falls between 12,9% and 13,3%. We also develop a detection model to clarify this probability. Our estimate is based on detection durations, calculated from data reported for all the cartels convicted by the European Commission from 1969 to the present date, and a statistical birth and death process model describing the onset and detection of cartels.