Market Shares as a Collusive Marker: Evidence From the European Truck Industry

Collusion theory robustly predicts non-cartel rivals will raise their prices and increase their output. As a typical cartel cuts back production, its competitors are expected to gain market share during the collusive period and to lose market share in the period following the cartel's demise. We provide empirical support for this prediction by showing that it applies to the European truck cartel. We also illustrate how our analysis can be used in the prosecution stage. One truck manufacturer denied cartel participation, whereas the proposed market share test supports the European Commission's finding that this firm was, in fact, a member.