Cartel Damages to the Economy: An Assessment for Developing Countries
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The competition policy implementation and enforcement, including cartel deterrence and detection, require substantial investments. Therefore, it is important to understand to which extent these investments are compensated in terms of prevented damages to consumers. Answer to this question is especially important for developing countries for which decision to create or reinforce an antitrust authority largely depends on associated costs, while the sufficient and robust quantitative evaluation of potential benefits is still missing. The present study aims at providing the missing evidence by assessing the aggregate economic harm caused by cartels in developing countries. We find that economic damage of cartels already detected in developing countries is substantial—in terms of affected sales related to GDP the maximal rate reaches up to 6.38 %, while excess profits resulting from unjustified price overcharges reach up to 1 % when related to GDP. Furthermore, if one wants to take into account cartels that were not detected, the total damage appears at least four times larger.
KeywordsHard-core cartel Developing countries Cartel damages Antitrust Cartel deterrence Price overcharge
JEL ClassificationsL12 L42 K22 B14 F29
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