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The Welfare Implications of the Meeting Design of a Cartel

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  • María C. Avramovich

    (Universidad Nacional de Córdoba)

Abstract

This paper investigates the welfare implications of introducing a delegation problem into a price-fixing collusion game. Within a model in which each cartel conspirator has an irreplaceable market expertise, I demonstrate that the delegation of decisions to representatives for concealment purposes can lead to inefficient decisions. In this context, while a more severe antitrust policy contributes to deterrence, it can also induce surviving cartels to maximize concealment through delegation, which creates inefficiencies that are not considered in standard models of collusion. Leniency programs can exacerbate this perverse effect of policy.

Suggested Citation

  • María C. Avramovich, 2020. "The Welfare Implications of the Meeting Design of a Cartel," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(1), pages 59-83, August.
    • Handle: RePEc:kap:revind:v:57:y:2020:i:1:d:10.1007_s11151-019-09718-1
    DOI: 10.1007/s11151-019-09718-1
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    More about this item

    Keywords

    Antitrust policy; Collusion; Managerial behaviour; Social welfare;
    All these keywords.

    JEL classification:

    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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