Wednesday, September 11, 2019
Douglas Silveira, Federal University of Juiz de Fora; Pontifical Catholic University of Rio de Janeiro (PUC-Rio), Silvinha Vasconcelos, Universidade Federal de Juiz de Fora - Department of Economics, Paula Bogossian, Joaquim Henriques Vianna Neto, Universidade Federal de Juiz de Fora are using Cartel Screening in the Brazilian Fuel Retail Market.
ABSTRACT: We aim to contribute to the challenges faced by the antitrust authorities in the identification process of anti-competitive market behavior. We propose two econometric models to select possible cases to be investigated: (i) The Markov-Switching GARCH (MSGARCH) Models; (ii) The Local Gaussian Correlation (LGC) approach. We compare both models. Our results indicate that the LGC model, based on the correlation of the resale price margin and the variability of prices, may provide a biased estimation of the likelihood that a market is practicing cartel. The MSGARCH model, based only on the log deviation of the gasoline sale price, showed a better accuracy in cartel detection.