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Antitrust policy and price collusion. Public agencies vs delegation

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  • Gianmaria Martini
  • Cinzia Rovesti

Abstract

This paper investigates the effectiveness of antitrust policy in fighting horizontal collusion under different regimes of policy implementation. We consider two regimes : a public agency regime, where an antitrust authority is in charge of competition policy, and a "delegation" regime, where the policy is chosen by consumers. In both regimes the policy is implemented under discretion. The analysis shows that delegation dominates, both in case of complete and imperfect information about production costs, the public agency regime because consumers credibly start off an higher level of investigation activity than the public agency. This resuit implies that the public agency will fight the cases involving "relevant" anti-competitive activities, while consumers will act also against "minor" violations. The combination of the two regimes yields an higher welfare than having only a public agency in charge of competition policy, because consumers can partially relax the agency's limited resources constraint.

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Bibliographic Info

Article provided by De Boeck Université in its journal Recherches économiques de Louvain.

Volume (Year): 70 (2004)
Issue (Month): 2 ()
Pages: 127-151

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Handle: RePEc:cai:reldbu:rel_702_0127

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Web page: http://www.cairn.info/revue-recherches-economiques-de-louvain.htm

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Cited by:
  1. Schwartz, Warren F. & Wickelgren, Abraham L., 2011. "Optimal antitrust enforcement: Competitor suits, entry, and post-entry competition," Journal of Public Economics, Elsevier, vol. 95(7), pages 967-972.
  2. Bourjade, Sylvain & Rey, Patrick & Seabright, Paul, 2009. "Private Antitrust Enforcement in the Presence of Pre-Trial Bargaining," TSE Working Papers 09-041, Toulouse School of Economics (TSE).

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