The strategic interaction between cartels and anti-trust authorities

Jonas Häckner () and Mathias Herzing ()

International Review of Law and Economics, 2022, vol. 70, issue C

Abstract: We present a model of the interaction between firms agreeing on a degree of collusion and a competition authority that simultaneously determines the allocation of resources to enforcement of anti-trust legislation. An increase in demand is associated with tougher enforcement and a lower degree of collusion. A stronger competitive pressure first decreases the degree of collusion and increases the level of enforcement, then increases both the degree of collusion and the level of enforcement, and eventually increases the degree of collusion and decreases the level of enforcement. Simulation results indicate that a move from the EU penalty regime to the tougher US standard with treble damages would mainly impact on the enforcement intensity and to a much lesser extent affect the degree of collusion.

Keywords: Competition policy; Cournot; Market structure; Product differentiation (search for similar items in EconPapers)
JEL-codes: D61 K20 L40 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:70:y:2022:i:c:s0144818822000229

DOI: 10.1016/j.irle.2022.106066

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