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Cartel Organization and Antitrust Enforcement

Author

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  • Zhijun Chen

    (Centre for Competition Policy University of East Anglia, and School of Economics, Zhejiang University)

Abstract

This papers incorporates the economic theory of organizations into the framework of public law enforcement, and characterizes the dual-coalition structure of cartel organisation that allows us to highlight the strategic interactions between cartel participants under different antitrust policies. We show that delegation of authorities over collusive decisions from top executives to subordinates can mitigate the temptation of renege on collusive relationships and thus contributes to facilitating collusion. This result parallels the insights in Baker, Gibbons and Murphy (2002, 2006) which find that the optimal allocation of decision rights is to minimize the maximum temptation to renege on relational contracts. Moreover, the efficiency gains of delegation in facilitating collusion can be mitigated when the corporate leniency program is introduced, in particular whenever it is unlikely to detect cartels absent leniency and the corporate liability is much significant than individual liability.

Suggested Citation

  • Zhijun Chen, 2008. "Cartel Organization and Antitrust Enforcement," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2008-21, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    • Handle: RePEc:uea:ueaccp:2008_21
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    Cited by:

    1. Tim Reuter, 2017. "Endogenous Cartel Organization and Antitrust Fine Discrimination," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 51(3), pages 291-313, November.

    More about this item

    Keywords

    Cartel Organization; Antitrust Enforcement; Leniency Programs;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • 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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