2015 | 11 | 2 | 96-114
Article title

Screening for collusion: Evidences from the Indian cement industry

Title variants
Languages of publication
The paper is devoted to evaluation of the econometric method applied as a part of a variance screen in collusion detection procedure. Validation is based on ex-post analysis of Indian cement industry in the 1994 - 2009 time period and comparative study of the obtained results with factual evidences of collusion at that market. The method in question is based on MS(M)AR (p, q) Markov switching model specification. As a result of the research we could identify variability regimes consistent with theoretical motivation of the marker and detect collusion and competition phases partly consistent with historical evidences. However promising, method had some drawbacks applied to high frequency data in the context of variance screen. We proposed some solutions for further research to overcome it.
Physical description
  • Buccirossi P. (Ed.), 2008. Handbook of antitrust economics, The MIT Press
  • Lütkepohl H., Krätzig M. (Eds.), 2004. Applied time series econometrics, Cambridge University Press,
  • Silverman B.W., 1986. Density estimation for statistics and data analysis, London: Chapman & Hall,
  • Abrantes-Metz R., 2013. "Pro-active vs. reactive anti-cartel policy: the role of empirical screens", mimeo
  • Abrantes-Metz R., Kraten M., Metz A.D., Seow G.S., 2012. "Libor manipulation?", Journal of Banking and Finance, 36, pp.136-150
  • Abrantes-Metz R., Villas-Boas S.B., Judge G., 2011. "Tracking the libor rate", Applied Economics Letters, 18, pp.893-899,
  • Abrantes-Metz R., Froeb L., Geweke J., Taylor C., 2006. "A variance screen for collusion", International Journal of Industrial Organization, Vol. 24, pp.467-486,
  • Anand S., 2009. "Identifying cartels using economic evidence. A case study of Indian cement industry", Competition Commision of India, New Delhi
  • Athey S., Bagwell K., Sanchirico C., 2004. "Collusion and price rigidity", Review of Economic Studies, Vol.71, pp.317-349,
  • Bajari P., Ye L., 2003. "Deciding between competition and collusion", Review of Economics and Statistics, Vol.85, pp.971-89,
  • Bejger, S., 2009. "Econometric tools for detection of collusion equilibrium in the industry", Dynamic Econometric Models, Vol.X, pp.34-45,
  • Bejger S., 2010. "Collusion and seasonality of market price - a case of fixed market shares", Business and Economic Horizons, Vol.2, pp.48-59,
  • Bejger S., Bruzda J., 2011. "Detection of collusion equilibrium in an industry with application of wavelet analysis", Dynamic Econometric Models, Vol.11, pp.171-184
  • Bejger S., 2011. "Polish cement industry cartel - preliminary examination of collusion existence", Business and Economic Horizons, Vol.4, pp.88-107,
  • Bejger S., 2012. "Cartel in the Indian cement industry: An attempt to identify it", Economics E-journal Discussion paper
  • Blanckenburg K., Geist A., Kholodilin K.A., 2012. "The influence of collusion on price changes: New evidence from major cartel cases", German Economic Review, Vol.13(3), pp.245-56
  • Blanckenburg K., Geist A., 2009. "How can a cartel be detected?", International Advances in Economic Research, Vol.15, pp.421-436,
  • Bolotova Y., Connor J.M., Miller D.J., 2008. "The impact of collusion on price behavior: Empirical results from two recent cases", International Journal of Industrial Organization, Vol. 26, pp.1290-1307
  • Cement Manufacturer Association Annual Report, 2010. Electronic document:
  • Connor J.M., 2005. "Collusion and price dispersion", Applied Econometric Letters, Vol.12, pp.335-38,
  • Connor J., Helmers G., 2006. "Statistics on modern private international cartels, 1990-2005", Dept. of Agricultural Economics, Purdue University, Working Paper No.06-11
  • Davidson J., 2004. "Forecasting Markov-switching dynamic, conditionally heteroscedastic processes", Statistic and Probability Letters, 68(2), pp.137-147,
  • Consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union, Official Journal C 326, 26/10/2012, pp.0001-0390
  • Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements - 2011/C 11/01, 2011, Official Journal of the European Union
  • Esposito F.M., Ferrero M., 2006. "Variance Screens for Detecting Collusion: An Application to Two Cartel Cases in Italy", (mimeo)
  • Hamilton J.D., 1989. "A new approach to the economic analysis of nonstationary time series and the business cycle", Econometrica, Vol.57, pp.357-384,
  • Hamilton J.D., Susmel, R., 1994. "Autoregressive conditional heteroscedasticity and changes in regime", Journal of Econometrics 64, 307-333,
  • Harrington J.E., 2008. "Detecting Cartels", in Handbook of Antitrust Economics, pp.213-258
  • Harrington J.E., 2006. "Behavioral screening and the detection of cartels", in European Competition Annual 2006: Enforcement of Prohibition of Cartels, pp.51-68
  • Hay, G., 2013. "Anti-competitive agreements: The meaning of "Agreement", Cornell Law Faculty Working Papers, Paper 105
  • Hüschelrath R., 2010. "How are cartels detected? The increasing use of pro-active methods to establish antitrust infringements", Journal of European Competition Law & Practice, Vol.1, No.6
  • Hüschelrath K., Veith T., 2014. "Cartel detection in procurement markets", Managerial and Decision Economics, Vol.35(6), pp.404-422,
  • Jacqemin A., Slade M.E., 1989. "Cartels, collusion and horizontal merger", in: Schmalensee R., Willig R.D., 1989. Handbook of Industrial Organization, Vol.II, Elsevier Science Publishers B.V.
  • Jimenez J.L., Perdiguero J., 2011. "Could transport costs be lower? The use of a variance screen to evaluate competition in the petrol market in Spain", International Journal of Transport Economics, Vol.38 (3), pp.265-284
  • MRTPC, 2001. electronic document:
  • Kaplow L., 2011. "On the meaning of horizontal agreements in competition law", Harvard Law and Economics Discussion Paper No.691
  • Krolzig H.M., 1998. "Econometric modelling of Markov-Switching vector autoregressions using MSVAR for Ox", Working paper
  • Kim C.J., Nelson C.R., 1999. State-space models with regime switching, The MIT Press, London.
  • Kufel T., 2010. Ekonometryczna analiza cykliczności procesóe gospodarczych o wysokiej częstotliwości obserwowania, Wydawnictwo UMK, Toruń
  • Levenstein M., Suslow V., 2006. "What determines cartel success?", Journal of Economic Literature, 44(1), pp.43-95,
  • Lorenz C., 2008. "Screening markets for cartel detection: Collusive markers in the CFD cartel-audit", European Journal of Law and Economics, 26(2), pp.213-32,
  • Maskin E., Tirole J., 1988. "A theory of dynamic oligopoly II", Econometrica 56, 571-599,
  • Petit N., 2012. "The oligopoly problem in EU competition law". In: Liannos I. and Geradin D. (Eds.), Research Handbook in European Competition Law, Edward Elgar, September 2013,
  • Porter R.H., Zona J.D., 1999. "Ohio school milk markets: An analysis of bidding", RAND Journal of Economics, Vol.30, pp.263-88,
  • Posner R., 1969. "Oligopoly and the antitrust laws: A suggested approach", 21 Stanford Law Review
  • Rotemberg J., Saloner G., 1990. "Collusive price leadership", The Journal of Industrial Economics, Vol.39, pp.93-111,
  • Russo F., Schinkel M.P., Gunster A., Carree M., 2010. European Commission decisions on competition. Economic perspectives on landmark antitrust and merger cases, Cambridge University Press, New York,
  • Tirole J., 1998. The theory of industrial organization, The MIT Press, England
  • Vives X., 1999. Oligopoly pricing. Old ideas and new tools, The MIT Press, Cambridge MA
Document Type
Publication order reference
YADDA identifier
JavaScript is turned off in your web browser. Turn it on to take full advantage of this site, then refresh the page.