Sunday, Jan. 5, 2020 10:15 AM - 12:15 PM (PDT)
- Chair: Cuicui Chen, State University of New York-Albany
Trade Associations and Collusion among Many Agents: Evidence from Physicians
AbstractWe study a recent case where most gynecologists in one city formed a trade association to bargain for better rates with insurance companies. After unsuccessful negotiations, the physicians jointly terminated their insurer contracts and set a minimum price. We find that subsequent realized prices coincided with Nash-Bertrand prices, and that the minimum price was barely binding. We show that these actions ensured the association’s stability and increased profits. Our findings shed light on the role of trade association in collusion among a large number of heterogeneous agents, and provide insights for the antitrust analysis of trade associations.
Colluding Against Environmental Regulation: The Case of German Automakers
AbstractRegulation oftentimes necessitates technology adoption. What happens when firms coordinate instead of compete in technology adoption? We study the welfare consequence of the confirmed collusion among five German automakers in holding back the adoption of effective NO$_x$ control technology in diesel passenger vehicles starting in 2006. Based on our estimates of how adopting the effective technology would have reduced desirable cargo space and fuel economy, we build and estimate a structural model of collusion in technology adoption in which firms may not comply with environmental regulation and, therefore, face the risk of being detected by the regulator. With the estimated model, we examine how social welfare would have improved if firms had instead competed in technology adoption, and draw quantitative implications for both antitrust policy and environmental regulation.
- L4 - Antitrust Issues and Policies
- D2 - Production and Organizations