Collusive networks in market sharing agreements in the presence of an antitrust authority
UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía
This paper studies how the presence of an antitrust authority affects market-sharing agreements made by firms in oligopolistic markets. These agreements prevent firms from entering each other´s market. The set of market-sharing agreements defines a collusive network, which is under suspicion by antitrust authorities. This paper shows that, from the firm´s point of view, the probability of being caught is endogenous and depends on the agreements each firm has signed. Stable collusive networks can be decomposed into a set of isolated firms and complete alliances of different sizes. While in the absence of the antitrust authority, a network is stable if its alliances are large enough, when the antitrust authority is considered, the network is stability depends on the network configuration as a whole. Antitrust laws may have a pro-competitive effect as they give Firms in large alliances more incentives to cut their agreements at once.
Keywords: Market-sharing; Economic; networks; Antitrust; authority; Oligopoly (search for similar items in EconPapers)
JEL-codes: D43 K21 L41 (search for similar items in EconPapers)
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Journal Article: Collusive Networks in Market‐Sharing Agreements in the Presence of an Antitrust Authority (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:we085024
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