Riccardo Faini CEIS Seminars
Rocco Macchiavello (London School of Economics)

Relational Collusion in the Colombian Electricity Market

Riccardo Faini CEIS Seminars

Friday, April 14, 2023 h. 12:00-13:30


Room A - 1st Floor – Building B
Facolta' di Economia
Universita' degli Studi di Roma 'Tor Vergata'
Via Columbia 2, Roma


Rocco Macchiavello (London School of Economics)

Under collusion, firms deviate from current profit maximization in antici-pation of future rewards. As current profit maximization places little restrictions on firms’ pricing behaviour, collusive conduct is hard to infer. We show that bids from certain firms in the Colombian wholesale electricity market collapsed immediately after the announcement, and before the implementation, of a reform that potentially made collusion harder to sustain. After ruling out confounders, we uncover how the cartel functioned and how firms may have communicated. Calibrating the dynamic enforcement constraint confirms that collusion was sustainable before, but not after, the reform. The conclusions discuss policy implications.

Riccardo Faini CEIS Seminars list


Scientific committee

Mariangela Zoli, Tiziano Arduini, Furio Camillo Rosati


Barbara Piazzi