Thursday, February 12, 2009
Posted by D. Daniel Sokol
ABSTRACT: Based on evidence of price-fixing, the Competition Bureau targeted in May of 2006 retail gasoline outlets in some local markets in the province of Quebec. In June 2008, criminal charges were laid against many individuals and companies operating in those local markets. We employ a differences-in-differences approach to determine whether the public announcement of the antitrust investigation triggered a reaction in one of the targeted market. We find that the price in the targeted market fell by 1.75 cents per liter after the public announcement of the investigation. We also briefly discuss how well the Stiglerian theory of collusion performs in this real-world conspiracy.