Cartels as Shock Absorbers: Collusion Dynamics in Times of Macroeconomic Instability - Université Paris-Panthéon-Assas
Pré-Publication, Document De Travail (Working Paper) Année : 2025

Cartels as Shock Absorbers: Collusion Dynamics in Times of Macroeconomic Instability

Résumé

This paper investigates how business cycles and interest rate fluctuations affect cartel dynamics. To do so, we apply a Hidden Markov Model to a unique dataset on a population of (legal) cartels in Sweden, from 1947 to 1993. We find that GDP shocks and higher interest rates, as a proxy for borrowing costs, increase cartel formation and reduce cartel dissolution, with stronger effects in the manufacturing sector. Thus, GDP shocks and higher interest rates lead to an increase in the number of cartels in the economy. These findings highlight how cartels act as shock absorbers, helping firms handle economic instability and reducing the impact of both positive and negative shocks.
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Dates et versions

hal-04864772 , version 1 (05-01-2025)

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  • HAL Id : hal-04864772 , version 1

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Tove Forsbacka, Chloé Le Coq, Catarina Marvão. Cartels as Shock Absorbers: Collusion Dynamics in Times of Macroeconomic Instability. 2025. ⟨hal-04864772⟩
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