Multi-Market Collusion with Demand Linkages and Antitrust Enforcement

Jay Choi and Heiko Gerlach

No 2632, CESifo Working Paper Series from CESifo

Abstract: This paper analyzes dynamic cartel formation and antitrust enforcement when firms operate in demand-related markets. We show that cartel prosecution can have a knock-on effect: desisting a cartel in one market reduces profits and cartel stability and leads to the break-up of the cartel in the adjacent market. Cartel prosecution can also have a waterbed effect: desisting a cartel increases cartel stability in the adjacent market and induces cartel formation in previously competitive markets. We also consider policy implications of our analysis regarding an antitrust authority's investment decision in cartel enforcement.

Keywords: cartel formation; demand linkage; antitrust enforcement (search for similar items in EconPapers)
JEL-codes: D43 L13 L41 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Multi-Market Collusion with Demand Linkages and Antitrust Enforcement (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2632

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