Joe Kaboski (Notre Dame) will present:
"Growth Policy, Agglomeration, and (the Lack of) Competition"
at 12:15pm on Tuesday, September 20, 2016 in (051 Buchanan) Volanakis - TUCK
Lunch will be served at noon.

If you will be attending the Lunch Seminar please RSVP to Richard Reilly at TUCK so he can order the appropriate amount of food.
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https://docs.google.com/spreadsheets/d/1yf-rEKc2TbKRSDHyHLu8XWqrZOWuzN_oVxamBL9NZ7o/edit?usp=sharing


Abstract

Industrial clusters are generally viewed as good for growth and development, but clusters can also enable non-competitive behavior. This paper studies the presence of non-competitive pricing in geographic industrial clusters. We develop, validate, and apply a novel identification strategy for collusive behavior. We derive the test from the solution to a partial cartel of perfectly colluding firms in an industry. Outside of a cartel, markups depend on a firm's market share but not on the total market share of firms in the agglomeration, but in the cartel, markups across firms converge and depend only on the overall markets share of the agglomeration. Empirically, we validate the test using plants with a common owner, and we then test for collusion using data from Chinese manufacturing forms (1999-2009). We find strong evidence for non-competitive pricing within a subset of industrial clusters, and we find the level of non-competitive pricing is roughly four times higher in China's "special economics zones"






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