Dissemination of our research is a key objective of the CCLE. High quality research depends on a critical audience and, in turn, the wide dissemination of research. To promote critical discourse, the CCLE hosts a peer-reviewed working paper series.
For more information on how to contribute to the series, contact the working paper editor Roan Minnie
Working papers – 2019
Paul W.J. de Bijl and Helanya Fourie
This paper explores the relationship between local public ownership and the sustainability mission of companies in the energy transition. Public ownership may matter due to “contractual incompleteness” where legislation and regulation fall short in dealing with market failures or addressing public interests. Ownership provides a measure of influence and control over the mission and strategy of a company, which is important in light of the unanticipated consequences of the energy transition. The role of municipal ownership is underlined by the growing popularity of district heating and cooling systems and the impact of the energy transition on the urban environment.
Working papers – 2017
Under imperfect competition, firm’s incentive to deviate from a collusive agreement is usually short term: the rm increases its immediate prot but reduces its future prots due to the upcoming competitors’ reaction. When firms have to invest to increase their production, and that investment is irreversible, a rm may deviate to preempt its competitors and obtain a dominant position on the market. When firms are more patient, preemption is more protable, and collusion may thus be harder to sustain. This result, contrasting with the literature on collusion, suggests that folk theorems may be inappropriate to study collusion in Markovian frameworks.
Willem Boshoff & Johannes Paha
Firms sometimes violate competition laws by agreeing on increases of list prices. The economic effects of such list price collusion are far from clear because the cartel firms might deviate secretly from the elevated prices by granting their customers discounts. This article presents case evidence suggesting that agreements on list prices are not infrequently observed in cartel cases. It also reviews theoretical, empirical, and experimental literature in economics showing under what conditions such list price collusion causes the discounted transaction prices to rise. This is relevant for competition authorities in developing a theory of harm when prosecuting cartels, and also for the customers of the cartel firms when suing the conspirators for the repayment of damages.
Recurrent collusion: Cartel episodes and overcharge in the South African cement market (WPS03/2017))
Willem Boshoff & Rossouw van Jaarsveld
Collusion is often a recurrent phenomenon, with cartel periods interspersed by periods of greater competition. In developing countries in particular, industries with a history of legal collusion are often characterized by recurrent collusion. Canonical models implicitly treat collusion as recurrent by modelling collusion as a state dependent outcome, often based on an unobserved demand state. Yet empirical studies have paid less attention to recurrent collusion. This paper proposes a Markov regime-switching (RS) model to detect recurrent periods of collusive damages and to estimate price overcharge in these cases. An empirical model of recurrent collusion must satisfy three properties. Firstly, it should account for dierent datagenerating processes during collusive and non-collusive episodes. Secondly, it should be able to detect the dates and duration of collusive and non-collusive episodes. Thirdly, it should account for exible transitions between collusive and non-collusive episodes. We argue that the RS model meets these requirements. We demonstrate these features in an application to the South African cement market, which, similar to cement markets in a number of other countries, have experienced recurrent collusion. Our results suggest that the exclusion of non-collusive periods { including price wars { yield higher overcharge estimates than conventional approaches. In competition policy, the RS model can act as a screening tool, to identify recurrent collusive behaviour. Courts may also nd the RS model useful when estimating collusive damages, especially in private litigation, where the court must also determine the period of liability.
other publications
Journal articles and other contributed publications will be posted here.