Antitrust as Facilitating Factor for Collusion

Iwan Bos, Wilko Letterie and Dries Vermeulen

The B.E. Journal of Economic Analysis & Policy, 2015, vol. 15, issue 2, 797-814

Abstract: This paper examines collusion among firms whose discount factors are private information. Mutual uncertainty regarding intentions to restrict competition might undermine the possibility of tacit collusion. Firms that want to collude may, however, reveal their intentions by consciously acting in breach of antitrust laws. As antitrust activity makes explicit collusion costly in expected terms, it can potentially be (ab)used as signaling device. We show that the fight against cartels may indeed facilitate collusion.

Keywords: antitrust enforcement; cartel formation; explicit collusion; tacit collusion (search for similar items in EconPapers)
JEL-codes: L1 L4 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (7)

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DOI: 10.1515/bejeap-2014-0023

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