Advanced Search
MyIDEAS: Login to save this paper or follow this series

The Determination of Optimal Fines in Cartel Cases The Myth of Underdeterrence

Contents:

Author Info

  • Marie-Laure Allain

    (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)

  • Marcel Boyer

    (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, UdeM - Université de Montréal - Université de Montréal)

  • Rachidi Kotchoni

    (University of Alberta - [-])

  • Jean-Pierre Ponssard

    (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)

Abstract

The determination of optimal fines to deter the formation or continuation of cartels is a major objective of competition policy. We provide an analysis of static and dynamic frameworks to characterize the restitution and deterrence properties of fines: cartel stability depends on their ability to prevent deviation by firms, while the benefit of a deviation depends on the fines to be imposed in case of detection by the antitrust authority. We show that the proper consideration of the dynamics of competition has a major impact on the determination of optimal dissuasive fines: our results suggest that a clear majority of fines imposed by the European Commission in recent years meet the deterrence objective.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://hal.archives-ouvertes.fr/docs/00/63/14/32/PDF/cahier_de_recherche_2011-19.pdf
Download Restriction: no

Bibliographic Info

Paper provided by HAL in its series Working Papers with number hal-00631432.

as in new window
Length:
Date of creation: 12 Oct 2011
Date of revision:
Handle: RePEc:hal:wpaper:hal-00631432

Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00631432/en/
Contact details of provider:
Web page: http://hal.archives-ouvertes.fr/

Related research

Keywords: Optimal fines; Cartels;

Other versions of this item:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Aubert, Cecile & Rey, Patrick & Kovacic, William E., 2006. "The impact of leniency and whistle-blowing programs on cartels," International Journal of Industrial Organization, Elsevier, vol. 24(6), pages 1241-1266, November.
  2. Marcel Boyer & Pierre Lasserre & Michel Moreaux, 2011. "A Dynamic Duopoly Investment Game without Commitment under Uncertain Market Expansion," CIRANO Working Papers 2011s-65, CIRANO.
  3. Friedman, James W, 1971. "A Non-cooperative Equilibrium for Supergames," Review of Economic Studies, Wiley Blackwell, vol. 38(113), pages 1-12, January.
  4. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
  5. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
  6. Demange, Gabrielle & Ponssard, Jean-Pierre, 1985. "Asymmetries in cost structures and incentives towards price competition," International Journal of Industrial Organization, Elsevier, vol. 3(1), pages 85-100, March.
  7. Connor, John M., 2005. "Price-Fixing Overcharges: Legal And Economic Evidence," 2005 Annual meeting, July 24-27, Providence, RI 19254, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  8. Ericson, Richard & Pakes, Ariel, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Wiley Blackwell, vol. 62(1), pages 53-82, January.
  9. Bryant, Peter G & Eckard, E Woodrow, Jr, 1991. "Price Fixing: The Probability of Getting Caught," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 531-36, August.
  10. Joseph E Harrington Jr, 2002. "Cartel Pricing Dynamics in the Presence of an Antitrust Authority," Economics Working Paper Archive 487, The Johns Hopkins University,Department of Economics, revised May 2003.
  11. Marcel Boyer & Tracy R. Lewis & Wei Lin Liu, 2000. "Setting standards for credible compliance and law enforcement," Canadian Journal of Economics, Canadian Economics Association, vol. 33(2), pages 319-340, May.
  12. Ponssard, Jean-Pierre, 1991. "Forward induction and sunk costs give average cost pricing," Games and Economic Behavior, Elsevier, vol. 3(2), pages 221-236, May.
  13. Block, Michael Kent & Nold, Frederick Carl, 1981. "The Deterrent Effect of Antitrust Enforcement," Journal of Political Economy, University of Chicago Press, vol. 89(3), pages 429-45, June.
  14. Saïd Souam, 1997. "Optimal Antitrust Policy Under Different Regimes of Fines," Working Papers 97-37, Centre de Recherche en Economie et Statistique.
  15. Gromb, Denis & Ponssard, Jean-Pierre & Sevy, David, 1997. "Selection in Dynamic Entry Games," Games and Economic Behavior, Elsevier, vol. 21(1-2), pages 62-84, October.
  16. Aubert, Cécile & Rey, Patrick & Kovacic, William E., 2006. "The impact of leniency and whistle-blowing programs on cartels," Economics Papers from University Paris Dauphine 123456789/13637, Paris Dauphine University.
  17. Marcel Boyer & Rachidi Kotchoni, 2011. "The Econometrics of Cartel Overcharges," Working Papers hal-00631429, HAL.
  18. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
  19. Garoupa, Nuno, 2001. "Optimal magnitude and probability of fines," European Economic Review, Elsevier, vol. 45(9), pages 1765-1771, October.
  20. Rothschild, R., 1999. "Cartel stability when costs are heterogeneous," International Journal of Industrial Organization, Elsevier, vol. 17(5), pages 717-734, July.
  21. 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.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Emilie Dargaud & Andrea Mantovani & Carlo Reggiani, 2013. "The fight against cartels: a transatlantic perspective," Working Papers 2013/25, Institut d'Economia de Barcelona (IEB).
  2. Marcel Boyer & Rachidi Kotchoni, 2012. "How Much Do Cartels Typically Overcharge?," CIRANO Working Papers 2012s-15, CIRANO.
  3. Boyer, Marcel & Kotchoni, Rachidi, 2014. "How Much Do Cartels Overcharge?," TSE Working Papers 14-462, Toulouse School of Economics (TSE).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:hal-00631432. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.