Essays on Competition Policy

Abstract

A key challenge in cartel enforcement is identifying collusive agreements. In the first essay, together with my co-authors, we study two major Nordic procurement cartels that operated in the asphalt paving market. We find evidence that during the cartel period bids were clustered and the winning bid was isolated. We implement two cartel detection methods that exploit variation in the distribution of bids. The method developed by Clark et. al. (2020) correctly rejects competitive bidding for the cartel period in both markets. The method suggested by Huber and Imhof (2019) predicts a significantly higher probability of collusion for the cartel period in one of the markets. Our results indicate that statistical screening methods with modest data requirements can be useful for competition authorities in detecting collusive agreements.

In the second essay, together with my co-authors, we study the effects of entry deregulation in the Finnish interurban bus market. We find that the number of operators increased on routes connecting large and mid-sized cities. Increased competition resulted in 29% lower prices in the interurban bus market. Consistent with our evidence on entry, we find that prices decreased on routes connecting large and mid-sized cities, while on routes connecting smaller cities, we find no significant change in prices. We also study how the reform affected the long-distance railway market and find that increased intermodal competition resulted in a 22% price decrease. Overall, we find that the entry deregulation benefited consumers.

Most countries have adopted a merger control regime to identify and block anticompetitive mergers. However, typically only large deals must be notified to the authorities. In the final essay, I study the effect of exempted acquisitions in the Finnish private healthcare market. The Finnish healthcare market has experienced rapid consolidation, but only a small fraction of transactions have been notified to the Competition Authority. Using a difference-in-differences methodology, I find that after the acquisitions, prices in the acquired clinics rise considerably compared to non-acquired clinics. This post-acquisition price increase in acquired clinics is related to the target clinics adopting the pricing strategy of the acquirer.