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Fight Cartels or Control Mergers? On the Optimal Allocation of Enforcement Efforts within Competition Policy

  • Andreea Cosnita-Langlais
  • Jean-Philippe Tropeano

This paper deals with the optimal enforcement of the competition law between the merger and anti-cartel policies. We examine the interaction of these two branches of the competition policy given the budget constraint of the competition agency and taking into account the ensuing incentives for firms’ behavior in terms of choice between cartels and mergers. We are thus able to conclude on the optimal competition policy mix. We show for instance that to the extent that a tougher anti-cartel action triggers more mergers taking place, the public agency will optimally invest only in control fighting for a tight budget, and then in both instruments as soon as the budget is no longer tight. However, if the merger’s coordinated effect is taken into account, then when resources are scarce the agency may optimally have to spend first on controlling mergers before incurring the cost of fighting cartels.

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File URL: http://economix.fr/pdf/dt/2011/WP_EcoX_2011-18.pdf
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Paper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2011-18.

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Length: 15 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:drm:wpaper:2011-18
Contact details of provider: Postal: 200 Avenue de la République, Bât. G - 92001 Nanterre Cedex
Web page: http://economix.fr
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  1. Farrell, Joseph & Shapiro, Carl, 1990. "Horizontal Mergers: An Equilibrium Analysis," American Economic Review, American Economic Association, vol. 80(1), pages 107-26, March.
  2. Simon J. Evenett & Margaret C. Levenstein & Valerie Y. Suslow, 2001. "International Cartel Enforcement: Lessons from the 1990s," The World Economy, Wiley Blackwell, vol. 24(9), pages 1221-1245, 09.
  3. Cécile AUBERT & Jérôme POUYET, 2004. "Competition policy, regulation and the institutional design of industry supervision," Discussion Papers (REL - Recherches Economiques de Louvain) 2004022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  4. Lars S�Rgard, 2009. "OPTIMAL MERGER POLICY: ENFORCEMENT VS. DETERRENCE -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 57(3), pages 438-456, 09.
  5. Bittlingmayer, George, 1985. "Did Antitrust Policy Cause the Great Merger Wave?," Journal of Law and Economics, University of Chicago Press, vol. 28(1), pages 77-118, April.
  6. repec:cup:cbooks:9780521816632 is not listed on IDEAS
  7. Dennis Mueller, 1996. "Antimerger policy in the United States: History and lessons," Empirica, Springer, vol. 23(3), pages 229-253, October.
  8. Compte, Olivier & Jenny, Frederic & Rey, Patrick, 2002. "Capacity constraints, mergers and collusion," European Economic Review, Elsevier, vol. 46(1), pages 1-29, January.
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