Cartel Screening in the Brazilian Fuel Retail Market

23 Pages Posted: 18 Jul 2019 Last revised: 30 Dec 2020

See all articles by Douglas Silveira

Douglas Silveira

University of Alberta - Department of Economics

Silvinha Vasconcelos

Universidade Federal de Juiz de Fora - Department of Economics

Paula Bogossian

Independent

Joaquim Henriques Vianna Neto

Universidade Federal de Juiz de Fora

Date Written: July 10, 2019

Abstract

We aim to evaluate two different econometric screens for identifying anti-competitive behavior in the fuel retail market: (i) The Markov-Switching GARCH (MS-GARCH) Models; (ii) The Local Gaussian Correlation (LGC) approach. Using the gasoline cartel judged and condemned in Brasília as a benchmark, our results indicate that the LGC model, based on the correlation of the resale price margin and price variability, may provide a biased likelihood as well as an incorrect identification of cartel behavior over time. The MSGARCH model, based only on the log deviation of the average gasoline sales price, showed better accuracy in cartel detection.

Keywords: cartel screen, price dynamics, fuel retail market

JEL Classification: L41, L95, C22, C63

Suggested Citation

Silveira, Douglas and Vasconcelos, Silvinha and Bogossian, Paula and Henriques Vianna Neto, Joaquim, Cartel Screening in the Brazilian Fuel Retail Market (July 10, 2019). Available at SSRN: https://ssrn.com/abstract=3421185 or http://dx.doi.org/10.2139/ssrn.3421185

Douglas Silveira (Contact Author)

University of Alberta - Department of Economics ( email )

Edmonton, Alberta T6G 2R6
Canada

Silvinha Vasconcelos

Universidade Federal de Juiz de Fora - Department of Economics

Juiz de Fora, Minas Gerais
Brazil

Paula Bogossian

Independent ( email )

Joaquim Henriques Vianna Neto

Universidade Federal de Juiz de Fora ( email )

Campus
Juiz de Fora, Minas Gerais
United States

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