Cartel Conduct and Antitrust Compliance with Imperfect Information about Enforcement Risk

Johannes Paha

Journal of Institutional and Theoretical Economics (JITE), 2018, vol. 174, issue 3, 448-475

Abstract: This article models antitrust compliance training as a form of information acquisition. It finds that lower fines may benefit consumers by improving the deterrence of cartels: Sales managers who underestimate the severity of antitrust enforcement sometimes establish cartels that are actually unprofitable for their firms. This risk rises if an antitrust authority lowers the sanctions imposed on anticompetitive conduct. Therefore, it is a best response for firms' compliance officers to establish antitrust training programs to mitigate this risk and prevent cartels. Fines must however not be reduced so strongly as to make anticompetitive collusion profitable.

Keywords: collusion; compliance; enforcement risk; imperfect information (search for similar items in EconPapers)
JEL-codes: D82 K21 K42 L41 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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DOI: 10.1628/093245617X14996661407776

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