A Conjectural Variations Approach to Detecting Collusion: The Broiler Chicken Antitrust Litigation Case

In this paper we investigated the dynamic of competition in the U.S. broiler chicken industry from 2000 to 2023, focusing on the detection and the implications of alleged collusive behaviour. By employing a structural econometrics approach, we estimated the conjectural elasticities, offering an explanation for how potential collusive arrangements evolved over time. Our most important results show that the alleged collusion period elevated the conjectural elasticities for all defendants but increased the conjectural elasticity of the group of three largest publicly traded broiler companies the most. These results suggest that the industry tacit collusion could have morphed into explicit collusion, with the largest three firms being the likely leaders of the conspiracy. In addition, the computed Lerner indexes show that the market power has increased during the collusion period relative to the pre-collusion period and remained elevated afterwards, suggesting stubborn impact of collusion on competition even during the post collusion period.