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Fine Schedule With Heterogenous Cartels: Are The Wrong Cartels Deterred?

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Listed:
  • Sissel Jensen
  • Lars Sørgard

Abstract

This article analyzes the minimum fines necessary to prevent price fixing when the size of the potential cartel overcharge differs across industries. We show that the incentive constraint is typically binding in industries where cartels would lead to a high overcharge, while the participation constraint is typically binding in industries where the potential for overcharge is quite low. We show that the introduction of private litigation and criminal sanctions (such as imprisonment) can make cartels with high overcharges more stable and only deter some of the potential cartels with low overcharges. We contrast our minimum fine schedule with the fine schedules that can be derived from current judicial practice and discuss the policy implications of our results.

Suggested Citation

  • Sissel Jensen & Lars Sørgard, 2016. "Fine Schedule With Heterogenous Cartels: Are The Wrong Cartels Deterred?," Journal of Competition Law and Economics, Oxford University Press, vol. 12(2), pages 263-277.
    • Handle: RePEc:oup:jcomle:v:12:y:2016:i:2:p:263-277.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhw003
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    Citations

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    Cited by:

    1. Katsoulacos, Yannis & Motchenkova, Evgenia & Ulph, David, 2015. "Penalizing cartels: The case for basing penalties on price overcharge," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 70-80.
    2. Houba Harold & Motchenkova Evgenia & Wen Quan, 2015. "The Effects of Leniency on Cartel Pricing," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 15(2), pages 351-389, July.
    3. Yannis Katsoulacos & Evgenia Motchenkova & David Ulph, 2023. "Measuring the effectiveness of anti‐cartel interventions in the shadow of recidivism," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 2393-2407, June.
    4. Katsoulacos, Yannis & Motchenkova, Evgenia & Ulph, David, 2015. "Penalizing cartels: The case for basing penalties on price overcharge," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 70-80.

    More about this item

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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