ANTITRUST AGENCIES AND HARD-CORE CARTELS: A GAME THEORETIC PERSPECTIVE

Prof. Xiaowei Cai Ph.D
Additional contact information
Prof. Xiaowei Cai Ph.D: California Polytechnic State University Faculty of Applied Economics San Luis Obispo CA, U.S.A.

Revista Tinerilor Economisti (The Young Economists Journal), 2011, vol. 1, issue 17, 150-161

Abstract: This article studies the strategic interactions between cartelists and the antitrust agency in two theoretical game settings. In the simultaneous game, the numerical results show that it becomes harder for the firms to sustain collusion, but easier for the antitrust agency to detect collusion as the damage multiplier and the effectiveness of leniency program increase. In addition, inelastic demand can also lead to higher detection probability. Therefore, the cartel's collusive price can be reduced when the antitrust agency increases the damage multiplier, and/or implements the leniency program more efficiently. In the sequential game where the cartel decides its collusive price in the first stage, the equilibrium collusive price is higher, and antitrust agency's budget allocation on cartel detection is smaller than in the simultaneous game. And the probability of detection is 5% higher in the sequential game.

Keywords: Cartel; Simultaneous Game; Sequential Game; Antitrust; Detection (search for similar items in EconPapers)
JEL-codes: K21 L00 L12 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://feaa.ucv.ro/RTE/017-20.pdf (application/pdf)

Related works:
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:aio:rteyej:v:1:y:2011:i:17:p:150-161

Access Statistics for this article

Revista Tinerilor Economisti (The Young Economists Journal) is currently edited by Ionascu Costel

More articles in Revista Tinerilor Economisti (The Young Economists Journal) from University of Craiova, Faculty of Economics and Business Administration Contact information at EDIRC.
Bibliographic data for series maintained by Ionascu Costel ().