 Hard Core Cartels and Avoidance of Investigation in the Presence of an Antitrust AuthorityNo 505, Working Papers from Department of Management, Information and Production Engineering, University of Bergamo 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. Keywords: Hard Core Cartels; antitrust authority; antitrust remedies and fines; persistence of collusion. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:brh:wpaper:0505 Access Statistics for this paper More papers in Working Papers from Department of Management, Information and Production Engineering, University of Bergamo Contact information at EDIRC. |
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