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Market collusion with joint harm and liability sharing

Andreea Cosnita-Langlais (), Maxime Charreire and Florian Baumann

No 2019-21, EconomiX Working Papers from University of Paris Nanterre, EconomiX

Abstract: When it is impossible to identify ex post the producer of a product causing harm or the damage caused is indivisible although caused by multiple injurers, courts must apportion the total damage among tortfeasors. In this model we examine how such liability sharing rules affect the likelhood of tacit collusion. For this we use a standard Cournot oligopoly model where firms are collectively held liable for joint harm inflicted on third parties. The damage caused may be either linear or cumulative in total industry output. With repeated market interaction and grim strategies, we investigate the sustainability of collusion to derive some policy implications.

Keywords: Cournot oligopoly; liability sharing rules; market collusion (search for similar items in EconPapers)
JEL-codes: L41 L13 K13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com
Date: 2019
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