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Collusive networks in market sharing agreements in the presence of an antitrust authority

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Flavia Roldán ()

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Abstract

This paper studies how the presence of an antitrust authority affects market-sharing agreements made by firms in oligopolistic markets. These agreements prevent firms from entering each other´s market. The set of market-sharing agreements defines a collusive network, which is under suspicion by antitrust authorities. This paper shows that, from the firm´s point of view, the probability of being caught is endogenous and depends on the agreements each firm has signed. Stable collusive networks can be decomposed into a set of isolated firms and complete alliances of different sizes. While in the absence of the antitrust authority, a network is stable if its alliances are large enough, when the antitrust authority is considered, the network is stability depends on the network configuration as a whole. Antitrust laws may have a pro-competitive effect as they give Firms in large alliances more incentives to cut their agreements at once.

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Publisher Info
Paper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we085024.

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Date of creation: Sep 2008
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Handle: RePEc:cte:werepe:we085024

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Related research
Keywords: Market-sharing; Economic networks; Antitrust authority; Oligopoly;

Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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  12. Kai-Uwe Kühn, 2001. "Fighting collusion by regulating communication between firms," Economic Policy, CEPR, CES, MSH, vol. 16(32), pages 167-204, 04. [Downloadable!] (restricted)
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  15. Besanko, David & Spulber, Daniel F, 1989. "Antitrust Enforcement under Asymmetric Information," Economic Journal, Royal Economic Society, vol. 99(396), pages 408-25, June. [Downloadable!] (restricted)
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This page was last updated on 2009-11-26.

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