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Antitrust Fines in Times of Crisis

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  • Motta, Massimo
  • Fabra, Natalia

Abstract

In a model in which firms can go bankrupt because of adverse market shocks or antitrust fines, we find that even large corporate fines may not be able to induce deterrence. Managerial penalties are thus needed. If the policy may be changed according to the state of the business cycle, then the optimal outcome can always be achieved through antitrust fines that are more severe in good times and more lenient in bad times. A time-independent policy may result in either too many bankruptcies or under-deterrence as compared to the optimal policy.

Suggested Citation

  • Motta, Massimo & Fabra, Natalia, 2013. "Antitrust Fines in Times of Crisis," CEPR Discussion Papers 9290, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9290
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    References listed on IDEAS

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    Cited by:

    1. Argenton, C. & van Damme, E.E.C., 2014. "Optimal Deterrence of Illegal Behavior Under Imperfect Corporate Governance," Discussion Paper 2014-078, Tilburg University, Center for Economic Research.
    2. Angelo Castaldo & Marco Grantaliano & Nicola Faraone, 2018. "Sanzioni antitrust e vaglio giurisdizionale: uno sguardo alla tecnica di quantificazione," Public Finance Research Papers 33, Istituto di Economia e Finanza, DSGE, Sapienza University of Rome.

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    More about this item

    Keywords

    Antitrust fines; Managing incentives; Business cycles;
    All these keywords.

    JEL classification:

    • K14 - Law and Economics - - Basic Areas of Law - - - Criminal Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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