The Welfare Implications of the Meeting Design of a Cartel

María C. Avramovich ()
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María C. Avramovich: Universidad Nacional de Córdoba

Review of Industrial Organization, 2020, vol. 57, issue 1, No 3, 59-83

Abstract: Abstract This paper investigates the welfare implications of introducing a delegation problem into a price-fixing collusion game. Within a model in which each cartel conspirator has an irreplaceable market expertise, I demonstrate that the delegation of decisions to representatives for concealment purposes can lead to inefficient decisions. In this context, while a more severe antitrust policy contributes to deterrence, it can also induce surviving cartels to maximize concealment through delegation, which creates inefficiencies that are not considered in standard models of collusion. Leniency programs can exacerbate this perverse effect of policy.

Keywords: Antitrust policy; Collusion; Managerial behaviour; Social welfare (search for similar items in EconPapers)
JEL-codes: D21 K21 L22 L4 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s11151-019-09718-1

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