Green antitrust conundrum: Collusion with social goals

Limor Hatsor (), Nigar Hashimzade and Artyom Jelnov

MPRA Paper from University Library of Munich, Germany

Abstract: Recent antitrust regulations in several countries have granted exemptions for col- lusion aimed at achieving environmental goals. Firms can apply for exemptions if collusion helps to develop or to implement costly clean technology, particularly in sec- tors like renewable energy, where capital costs are high and economies of scale are significant. However, if the cost of the green transition is unknown to the competition regulator, firms might exploit the exemption by fixing prices higher than necessary. The regulator faces the decision of whether to permit collusion and whether to commission an investigation of potential price fixing, which incurs costs. We fully characterise the equilibria in this scenario that depend on the regulator’s belief about the high cost of green transition. If the belief is high enough, collusion will be allowed. We also identify conditions under which a regulator’s commitment to always investigate price fixing is preferable to making discretionary decisions.

Keywords: policy; antitrust; collusion; environment (search for similar items in EconPapers)
JEL-codes: F0 G38 K21 Q52 (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-com, nep-ene, nep-env, nep-ind and nep-reg
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Related works:
Working Paper: Green antitrust conundrum: Collusion with social goals (2024)
Working Paper: Green antitrust conundrum: Collusion with social goals (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:122611

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