This paper considers enhancements of a comparatively new method to detect cartels, the System of Cartel Markers (SCM), introduced
by Blanckenburg and Geist (Int Adv Econ Res 15(4):421–436, 2009). The aim of SCM is to find illegal collusion on legal markets with observable market data. It uses expected behavior patterns
such as low level of capacity utilization, slackness of price adjustments to exogenous shocks, excess rates of return, nearly
constant capacities, less price changes and lower variance of capacity growth rate. However, the testing of cost efficiency
is lacking so far. Following Leibenstein’s (Am Econ Rev 56:392–415, 1966) X-inefficiency theory, we assume that cartel members face lower competition and hence, tend to be less cost efficient. Therefore,
we enhance SCM and use cost efficiency as a further marker in order to detect cartels. We apply SCM to the German cement cartel
and find empirical support for some markers. The proposed methodology may be used for antitrust screening and regulatory purposes.
Keywords Competition policy – Workability of markets – Industry studies – Cartel detection
JEL Classification L10 – L60
Presented at The Shadow Economy, Tax Evasion and Social Norms, University of Muenster, Germany 2009.