Cartel Penalties Under Endogenous Detection

Berkay Akyapi () and Douglas Turner
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Berkay Akyapi: University of Florida

Review of Industrial Organization, 2022, vol. 61, issue 3, No 6, 371 pages

Abstract: Abstract We compare the performance of cartel penalties that are proportional to a cartel’s revenue and cartel penalties that are proportional to the difference between the cartel price and the competitive price: the overcharge. Prior literature has shown that when the probability of cartel detection does not depend on the cartel price, penalties that are based on a cartel’s overcharge generate greater total surplus and consumer surplus than do penalties that are based on a cartel’s revenue. In contrast, we find that when the probability of detection depends on the cartel price, penalties that are based on revenue can generate greater total surplus and consumer surplus.

Keywords: Antitrust; Cartel penalties; Cartels; Collusion; L4; K2; C7 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11151-022-09877-8

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