Analyzing Collusion Using Set-Identified Marginal Cost Functions

Mizuta, Seiichiro; Nishiwaki, Masato

Discussion Papers In Economics And Business, 2025, 25-03, 1-44

Number of Access:65（2025-09-04 08:32 Counts）

Identifier to cite or link to this item: https://hdl.handle.net/11094/101387

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Title
Analyzing Collusion Using Set-Identified Marginal Cost Functions
Creator
NRID
1000010962962 1000010962962
CreatorName
Mizuta, Seiichiro
NRID
1000080599259 1000080599259
researchmap permalink
7000007426 7000007426
Scopus Author ID
55796446500 55796446500
CreatorName
Nishiwaki, Masato
Subject
collusion
set identification
marginal cost functions
interval regression
JEL
C57
L40
Abstract
We propose an approach for analyzing markets in which firms are (suspected of) colluding. Our approach, which is based on set-identified marginal cost functions, enables us to screen for collusion and measure potential welfare losses caused by non-competitive behavior. The key idea is to exploit supernumerary (or excluded) instrumental variables that provide moment restrictions to falsify hypotheses about firm conduct and eliminate cost parameters implied by the falsified hypotheses. The resulting set of cost parameters that remain unfalsified under these restrictions functions as a screening tool for collusion. When competitive behavior is falsified, the corresponding parameter is excluded from the identified set. Additionally, the identified set can be used to measure potential welfare losses when competitive behavior is ruled out. This type of counterfactual welfare analysis is otherwise extremely difficult or nearly impossible to conduct.
Publisher
Graduate School of Economics, The University of Osaka
Source Title
Discussion Papers In Economics And Business
Volume (Issue)
25-03
Page
1-44
Date of Issued
2025-05
Language
English
Handle URL
https://hdl.handle.net/11094/101387
Relation.references
URI
https://www2.econ.osaka-u.ac.jp/econ_society/dp/2503.pdf
Access Rights
metadata only access
Category
ディスカッション／ワーキング・ペーパー DP/WP
Discussion Papers In Economics And Business