Optimal Cartel Pricing in the Presence of an Antitrust Authority

Joseph Harrington ()

Economics Working Paper Archive from The Johns Hopkins University,Department of Economics

Abstract: Price dynamics are characterized when a price-fixing cartel is concerned about creating suspicions of the presence of a cartel A dynamical extension of static models yields the counterfactual prediction that the cartel initially raises price and then gradually lowers it An alternative specification generates a more plausible result that the cartel gradually raises price For that specification the long-run cartel price is found to be decreasing in the damage multiple but is independent of the level of fixed fines A more stringent standard for calculating damages is shown to induce the cartel to price higher

Date: 2001-05, Revised 2002-07
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Citations: View citations in EconPapers (6)

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Journal Article: OPTIMAL CARTEL PRICING IN THE PRESENCE OF AN ANTITRUST AUTHORITY (2005)
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