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Antitrust policy and price collusion. Public agencies vs delegation

  • Gianmaria Martini
  • Cinzia Rovesti

This paper investigates the effectiveness of antitrust policy in fighting horizontal collusion under different regimes of policy implementation. We consider two regimes : a public agency regime, where an antitrust authority is in charge of competition policy, and a "delegation" regime, where the policy is chosen by consumers. In both regimes the policy is implemented under discretion. The analysis shows that delegation dominates, both in case of complete and imperfect information about production costs, the public agency regime because consumers credibly start off an higher level of investigation activity than the public agency. This resuit implies that the public agency will fight the cases involving "relevant" anti-competitive activities, while consumers will act also against "minor" violations. The combination of the two regimes yields an higher welfare than having only a public agency in charge of competition policy, because consumers can partially relax the agency's limited resources constraint.

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Article provided by De Boeck Université in its journal Recherches économiques de Louvain.

Volume (Year): 70 (2004)
Issue (Month): 2 ()
Pages: 127-151

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Handle: RePEc:cai:reldbu:rel_702_0127
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  1. Souam, Said, 2001. "Optimal antitrust policy under different regimes of fines," International Journal of Industrial Organization, Elsevier, vol. 19(1-2), pages 1-26, January.
  2. 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.
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  14. Block, Michael K & Feinstein, Jonathan S, 1986. "The Spillover Effect of Antitrust Enforcement," The Review of Economics and Statistics, MIT Press, vol. 68(1), pages 122-31, February.
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  17. Saïd Souam, 1998. "Dissuasion de la collusion et efficacité de deux systèmes d'amendes," Revue Économique, Programme National Persée, vol. 49(3), pages 755-765.
  18. Bizjak, John M & Coles, Jeffrey L, 1995. "The Effect of Private Antitrust Litigation on the Stock-Market Valuation of the Firm," American Economic Review, American Economic Association, vol. 85(3), pages 436-61, June.
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