Collusive networks in market sharing agreements in the presence of an antitrust authority

Flavia Roldán ()

Economics Working Papers from Universidad Carlos III, Departamento de Economía

Abstract: This paper studies how the presence of an antitrust authority affects market-sharing agreements made by firms in oligopolistic markets. These agreements prevent firms from entering each other´s market. The set of market-sharing agreements defines a collusive network, which is under suspicion by antitrust authorities. This paper shows that, from the firm´s point of view, the probability of being caught is endogenous and depends on the agreements each firm has signed. Stable collusive networks can be decomposed into a set of isolated firms and complete alliances of different sizes. While in the absence of the antitrust authority, a network is stable if its alliances are large enough, when the antitrust authority is considered, the network is stability depends on the network configuration as a whole. Antitrust laws may have a pro-competitive effect as they give Firms in large alliances more incentives to cut their agreements at once.

Keywords: Market-sharing; Economic networks; Antitrust authority; Oligopoly (search for similar items in EconPapers)
JEL-codes: D43 K21 L41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-law and nep-net
Date: 2008-09
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Persistent link: http://EconPapers.repec.org/RePEc:cte:werepe:we085024

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