Hard Core Cartels and Avoidance of Investigation in the Presence of an Antitrust Authority

Gianmaria Martini

Industrial Organization from University Library of Munich, Germany

Abstract: Hard Core Cartels aim to design, being aware of the presence of an antitrust authority, market practices granting avoidance of antitrust investigations. We show, in a dynamic game, that they can reach this goal and get extra--normal profits. However, the bulk of this opportunity does not lay, here, in limiting price changes across periods (as in Harrington [2004b]), but rather in sending a signal to the authority which has a twofold effect: (1) it does make evident that cartel's members are currently not engaged in an ``excessive'' degree of collusion, (2) it credibly shows that this moderate collusive activity has a persistence effect, i.e. it will be maintained also in future periods. We also show that antitrust remedies (e.g. behavioral constraints or injunction reliefs) are more powerful, in limiting the collusive activity, than fines. Last, we show that social welfare is higher if Hard Core Cartels have limited information about the type of authority (i.e. tough or accommodating) they are facing.

JEL-codes: D43 L13 L41 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2005-02-23
New Economics Papers: this item is included in nep-com, nep-ind and nep-reg
Note: Type of Document - pdf; pages: 56
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/io/papers/0502/0502014.pdf (application/pdf)

Related works:
Working Paper: Hard Core Cartels and Avoidance of Investigation in the Presence of an Antitrust Authority (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpio:0502014

Access Statistics for this paper

More papers in Industrial Organization from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ( this e-mail address is bad, please contact ).