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more tempting. On top of that, it should be noted that cross ownership also facilitates communication. We then conclude that cross ownership agreements have an ambiguous effect upon the sustainability of collusion.

Buyer power

Large, powerful buyers hinder collusion as they will utilize their power strategically, in order to give rise to price wars between sellers and obtain lower prices.

2.1.2    Behavioural screening

Retrospective studies of cartel prosecutions, particularly when they result in the collapse of a cartel, allow researchers to compare collusive and competitive regime to isolate the critical features of the conspiracy. As outlined above, a structural approach is based on the characteristics of an industry that increase the probability that a cartel will form. Conversely, a behavioural approach is based on characteristics that provide evidence that a cartel has formed.

A behavioural approach focuses on those aspects of market behaviour that might be susceptible of changing in response to collusive practices. Indeed, this approach basically try to find out which behaviour of participants is likely to be associated with cartels. Examples of variables that might be observed in the course of a behavioural screening are the pattern of firms' prices or quantities.

By reviewing the relevant literature on the matter, the approaches proposed for behavioural screening can be distinguished between methods focussing on the analysis of stationary collusive phase, and those dealing with the transitionary phase from collusion to non-collusion, and vice-versa. The former attempt to identify differences in firm behaviour from when firms compete. The latter look for radical changes in firm behaviour, which can be explained by the creation or collapse of a cartel. Normally such changes would be supported by evidence of a structural break in the data-generating process of some relevant variables, such as price, quantity, allocation of market shares, etc.

As regards the analysis of stationary collusive phase, the idea is to develop a number of collusive markers that would help distinguish collusion from competition. Such markers can then serve to screen industries so as to determine whether they are worthy of more intense investigations.

Collusive markers

Contextual and detailed cartel studies such as , Harrington (2005), Simpson (1993), Griffin (2000), Connor (2001, 2007), Eichenwald (2001), Mason (2004), Joshua and Harding (2002), and Levenstein and Salant (2007), suggest effective collusive markers.

We present herebelow a tentative list of collusive markers, patterns in market data consistent with cartel operations, which are derived by Harrington (2006) from the analysis of the Commission decisions over 1999-2004 (about 20 cartels), for which there is detailed information. Of the cartels reviewed, the canonical collusive outcome was characterized by an agreement in both price and the allocation of supply across cartel members. On such basis, the first distinction made by Harrington is among collusive markers involving price and quantity.

Price collusive markers

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