Fight Cartels or Control Mergers? On the Optimal Allocation of Enforcement Efforts within Competition Policy
AbstractThis paper deals with the optimal enforcement of the competition law between the merger and anti-cartel policies. We examine the interaction of these two branches of the competition policy given the budget constraint of the competition agency and taking into account the ensuing incentives for firms’ behavior in terms of choice between cartels and mergers. We are thus able to conclude on the optimal competition policy mix. We show for instance that to the extent that a tougher anti-cartel action triggers more mergers taking place, the public agency will optimally invest only in control fighting for a tight budget, and then in both instruments as soon as the budget is no longer tight. However, if the merger’s coordinated effect is taken into account, then when resources are scarce the agency may optimally have to spend first on controlling mergers before incurring the cost of fighting cartels.
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Bibliographic InfoPaper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2011-18.
Length: 15 pages
Date of creation: 2011
Date of revision:
competition law enforcement; antitrust; merger control; anti-cartel policy;
Other versions of this item:
- Cosnita-Langlais, Andreea & Tropeano, Jean-Philippe, 2013. "Fight cartels or control mergers? On the optimal allocation of enforcement efforts within competition policy," International Review of Law and Economics, Elsevier, vol. 34(C), pages 34-40.
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-06-18 (All new papers)
- NEP-COM-2011-06-18 (Industrial Competition)
- NEP-IND-2011-06-18 (Industrial Organization)
- NEP-REG-2011-06-18 (Regulation)
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- Tim Reuter, 2013. "Endogenous Cartel Organization and Antitrust Fine Discrimination," Working Paper Series of the Department of Economics, University of Konstanz 2013-09, Department of Economics, University of Konstanz.
- Hüschelrath, Kai & Smuda, Florian, 2013. "Do cartel breakdowns induce mergers? Evidence from EC cartel cases," ZEW Discussion Papers 13-036, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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