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Optimal dynamic antitrust policies

Author

Listed:
  • ROVESTI, Cinzia

    (Autorita Garante della Concorrenza, Roma, Italy and Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), 1348 Louvain la Neuve, Belgium)

Abstract

In a two period model with asymmetric information we study the optimalantitrust policies carried out by a public agency faced with firms'horizontal price-fixing behaviour. We analyse the effect on social welfare in case the Antitrust Authority decides to bind itself to follow the same policy, an investigation procedure, over the two periods. We interpret this policy as the adoption of antitrust guidelines. One can show that the introduction of antitrust guidelines does improve socialwelfare. Intertemporal dynamic effects on industry's strategies which bring to the ratchet effect do not offset the benefits that accrue to the agency from its commitment to the same policy across the periods.

Suggested Citation

  • ROVESTI, Cinzia, 1999. "Optimal dynamic antitrust policies," LIDAM Discussion Papers CORE 1999014, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:1999014
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    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp1999.html
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    More about this item

    Keywords

    dynamic antitrust policy; antitrust guidelines; ratchet effect.;
    All these keywords.

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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