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International Antitrust Enforcement and Multi-Market Contact

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  • Jay Pil Choi
  • Heiko Gerlach

Abstract

This paper analyzes international antitrust enforcement when multinational firms operate in several markets with antitrust authorities in each market. We are concerned with how the sustainability of collusion in one local market is affected by the existence of collusion in other markets when they are linked by demand relationships. The interdependence of collusion sustainability across markets leads to potential externalities in antitrust enforcement across jurisdictions. As a result, cartel prosecution can have a domino effect with the desistance of one cartel triggering the internal break-up of the cartel in the adjacent market. We further find that the equilibrium in antitrust authorities’ enforcement decisions may exhibit non-linearity due to a free-rider problem as the global economy is more integrated. We also analyze the equilibrium antitrust enforcement and compare it with the globally optimal antitrust enforcement policy.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2009/wp-cesifo-2009-03/cesifo1_wp2599.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2599.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2599

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Related research

Keywords: collusion; antitrust enforcement; multi-market contact;

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References

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  1. Buccirossi, Paolo & Spagnolo, Giancarlo, 2005. "Leniency Policies and Illegal Transactions," CEPR Discussion Papers 5442, C.E.P.R. Discussion Papers.
  2. Catherine ROUX & Thomas VON UNGERN-STERNBERG, 2007. "Leniency Programs in a Multimarket Setting: Amnesty Plus and Penalty Plus," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 07.03, Université de Lausanne, Faculté des HEC, DEEP.
  3. Massimo Motta & Michele Polo, . "Leniency Programs and Cartel Prosecution," Working Papers 150, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  4. Joseph E. Harrington, Jr, 2005. "Optimal Corporate Leniency Programs," Economics Working Paper Archive 527, The Johns Hopkins University,Department of Economics.
  5. Lefouili, Yassine & Roux, Catherine, 2012. "Leniency programs for multimarket firms: The effect of Amnesty Plus on cartel formation," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 624-640.
  6. Corwin D. Edwards, 1955. "Conglomerate Bigness as a Source of Power," NBER Chapters, in: Business Concentration and Price Policy, pages 331-359 National Bureau of Economic Research, Inc.
  7. Aubert, Cécile & Kovacic, William & Rey, Patrick, 2006. "The Impact of Leniency and Whistleblowing Programs on Cartels," Open Access publications from University of Toulouse 1 Capitole http://neeo.univ-tlse1.fr, University of Toulouse 1 Capitole.
  8. Block, Michael K & Feinstein, Jonathan S, 1986. "The Spillover Effect of Antitrust Enforcement," The Review of Economics and Statistics, MIT Press, vol. 68(1), pages 122-31, February.
  9. Eric W. Bond & Constantinos Syropoulos, 2008. "Trade costs and multimarket collusion," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 1080-1104.
  10. B. Douglas Bernheim & Michael D. Whinston, 1990. "Multimarket Contact and Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 1-26, Spring.
  11. Joseph E. Harrington, Jr, 2005. "Detecting Cartels," Economics Working Paper Archive 526, The Johns Hopkins University,Department of Economics.
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Citations

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Cited by:
  1. Robert M. Feinberg, 2011. "Exports-at-Risk: the Effect of Multi-Market Contact in International Trade"," Working Papers 2011-09, American University, Department of Economics.
  2. Jay Pil Choi & Heiko Gerlach, 2010. "Global Cartels, Leniency Programs and International Antitrust Cooperation," CESifo Working Paper Series 3005, CESifo Group Munich.
  3. Robert M. Feinberg & Thomas A. Husted, 2011. "Do States Free Ride in Antitrust Enforcement?," Working Papers 2011-07, American University, Department of Economics.
  4. Jay Pil Choi & Heiko Gerlach, 2009. "Multi-Market Collusion with Demand Linkages and Antitrust Enforcement," CESifo Working Paper Series 2632, CESifo Group Munich.

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