This paper examines the impact of a market allocation cartel in the Japanese electricity retail market, active from 2018 to 2020. During this period, four incumbents restricted competition by avoiding entry into each other’s regions. Analyzing electricity procurement auctions from both competitive and cartel periods, I find that cartel members reduced their participation rates and submitted complementary bids in other regions while increasing bid levels within their own regions, leading to winning bids rising by up to 9% despite continued competition with non-cartel firms. Counterfactual simulations using a model of auctions with asymmetric, risk-averse bidders suggest that without the cartel, continued market entry by these firms could have lowered winning bids by up to 5.5% and reduced winning costs by 3.4%. While increased competition led to minor inefficiencies due to asymmetry among bidders, the cartel’s exclusionary practices caused inefficiencies of up to 26%. Additionally, shifts toward nuclear energy generation were associated with lower procurement costs. These findings highlight the financial burden of cartel behavior and the benefits of fostering market competition for public institutions.

• CPRC Seminar @ Japan Fair Trade Commission(Jan 2025).

We revisit the identification of the conduct parameter in homogeneous goods markets. Lau (1982) argues that the conduct parameter is not identified if and only if the inverse demand function is separable, except for a specific separable function. This result has been regarded as an extension of the result in Bresnahan (1982) to more general settings. However, we show that Lau's claim is incorrect and provide a new characterization of the non-identification. Our characterization shows that a demand function with demand rotation instruments is the necessary and sufficient condition for the identification of the conduct parameter. Therefore, our result properly generalizes the role of demand rotation instruments in identifying the conduct parameter, as highlighted by Bresnahan (1982), to more general settings.

• Presentation information forthcoming.