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The strategic interaction between cartels and anti-trust authorities

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  • Häckner, Jonas
  • Herzing, Mathias

Abstract

We present a model of the interaction between firms agreeing on a degree of collusion and a competition authority that simultaneously determines the allocation of resources to enforcement of anti-trust legislation. An increase in demand is associated with tougher enforcement and a lower degree of collusion. A stronger competitive pressure first decreases the degree of collusion and increases the level of enforcement, then increases both the degree of collusion and the level of enforcement, and eventually increases the degree of collusion and decreases the level of enforcement. Simulation results indicate that a move from the EU penalty regime to the tougher US standard with treble damages would mainly impact on the enforcement intensity and to a much lesser extent affect the degree of collusion.

Suggested Citation

  • Häckner, Jonas & Herzing, Mathias, 2022. "The strategic interaction between cartels and anti-trust authorities," International Review of Law and Economics, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:irlaec:v:70:y:2022:i:c:s0144818822000229
    DOI: 10.1016/j.irle.2022.106066
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    References listed on IDEAS

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    More about this item

    Keywords

    Competition policy; Cournot; Market structure; Product differentiation;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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