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Price-fixing policy

Louis Kaplow

International Journal of Industrial Organization, 2018, vol. 61, issue C, 749-776

Abstract: The prohibition against price fixing is competition law's most important and least controversial provision. Yet there is far less consensus than meets the eye on what constitutes price fixing, and prevalent understandings cannot be reconciled with principles of oligopoly theory. This article (1) presents a fundamental reconceptualization of our understanding of horizontal agreements, (2) develops a systematic analysis of price-fixing policy that focuses on its deterrence benefits and chilling costs, and (3) compares this direct approach to commentators’ favored formulations that typically involve some sort of formalistic communications-based prohibition. By targeting a subset of means rather than the illicit ends, conventional formulations tend to impose liability in cases with lower deterrence benefits and greater chilling costs than those reached under a direct approach and to incur greater administrative costs as well.

Keywords: Price fixing; Competition policy; Antitrust; Conspiracy; Horizontal agreement; Collusion (search for similar items in EconPapers)
JEL-codes: D43 K21 L13 L41 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:indorg:v:61:y:2018:i:c:p:749-776