Cover IMF Working Papers
Macroeconomic Effects of Market Structure Distortions: Evidence from French Cartels
Author:
Flavien Moreau
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Ludovic Panon
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Series:
IMF Working Papers
Volume/Issue:
Volume 2022: Issue 104
Language:
English
Publication Date:
27 May 2022
DOI:
https://doi.org/10.5089/9798400210686.001
ISBN:
9798400210686
ISSN:
1018-5941
Pages:
85
Keywords:
Competition; cartels; collusion; welfare; misallocation; cartel member; market structure distortion; characteristics of cartel; systematic evidence; markup dispersion; Productivity; Demand elasticity; Total factor productivity; Inflation; Europe; Global
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2022: Issue 104