The Distortive Effects of Antitrust Fines Based on Revenue
AbstractIn most jurisdictions, antitrust fines are based on affected commerce rather than on collusive profits, and in some others, caps on fines are introduced based on total firm sales rather than on affected commerce. We uncover a number of distortions that these policies generate, propose simple models to characterize their comparative static properties, and quantify them with simulations based on market data. We conclude by discussing the obvious need to depart from these distortive rules-of-thumb that appear to have the potential to substantially reduce social welfare.
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Bibliographic InfoPaper provided by Stockholm Institute of Transition Economics, Stockholm School of Economics in its series SITE Working Paper Series with number 22.
Length: 23 pages
Date of creation: 08 Dec 2012
Date of revision:
Note: We are grateful to David Ulph for important suggestions, and to audiences at the ACLE’s Behavioral Antitrust workshop in Amsterdam, April 2012 and at the CRETE Conference in Milos, July 2012 for their lively discussions. Katsoulacos acknowledges support by the Economic and Social Research Council (ESRC, UK) under grant RES – 062 – 23 – 2211. Spagnolo acknowledges funding from the Swedish Competition Authority (Konkurrenseverket). Corresponding Author: Yannis Katsoulacos, Athens University of Economics and Business, Patision 76, Athens 104 34 Greece (email@example.com).
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Antitrust; Deterrence; Fines; Law Enforcement;
Other versions of this item:
- Vasiliki Bageri & Yannis Katsoulacos & Giancarlo Spagnolo, 2013. "The distortive effects of antitrust fines based on revenue," Working Papers 153, Bank of Greece.
- Bageri, Vasiliki & Katsoulacos, Yannis & Spagnolo, Giancarlo, 2013. "The Distortive Effects of Antitrust Fines Based on Revenue," CEPR Discussion Papers 9518, C.E.P.R. Discussion Papers.
- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-06-09 (All new papers)
- NEP-COM-2013-06-09 (Industrial Competition)
- NEP-IND-2013-06-09 (Industrial Organization)
- NEP-LAW-2013-06-09 (Law & Economics)
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