IDEAS home Printed from https://ideas.repec.org/a/bpj/rlecon/v19y2023i3p351-392n7.html
   My bibliography  Save this article

Intermittent Collusive Agreements: Antitrust Policy and Business Cycles

Author

Listed:
  • Dargaud Emilie

    (Univ Lyon, Université Lumière Lyon 2, GATE, UMR 5824, F-69130, Ecully, France)

  • Jacques Armel

    (CEMOI TEPP-CNRS (FR2042), Université de La Réunion, Faculté de Droit et d’Economie, 15, Avenue René Cassin, 97715 Saint-Denis Messag Cedex 9, Saint-Denis Cedex, France)

Abstract

In this article we study collusive strategies and the optimal level of fines when firms face random demand fluctuations. Collusive firms can choose to alternate collusive periods with more competitive periods: such an intermittent strategy can be implemented particularly if demand variability is high. Firms then set competitive prices during recessions to cancel the risk of cartel detection and keep the ability to cartelize for the future. If the maximum fine is too low to fully deter cartels, the antitrust authority can influence the choice of collusive agreement by varying the level of fines according to demand states. If the demand is highly variable, the antitrust authority may induce firms to collude in all demand states (by decreasing the fine during recessions), in order to detect and break up cartels more easily. On the other hand, if the demand variability is low the optimal policy may be to reduce the fine when demand is high.

Suggested Citation

  • Dargaud Emilie & Jacques Armel, 2023. "Intermittent Collusive Agreements: Antitrust Policy and Business Cycles," Review of Law & Economics, De Gruyter, vol. 19(3), pages 351-392, November.
    • Handle: RePEc:bpj:rlecon:v:19:y:2023:i:3:p:351-392:n:7
    DOI: 10.1515/rle-2022-0017
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/rle-2022-0017
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/rle-2022-0017?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    collusion; antitrust policy; business cycles;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:rlecon:v:19:y:2023:i:3:p:351-392:n:7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.