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The Determination of Optimal Fines in Cartel Cases The Myth of Underdeterrence

  • Marie-Laure Allain

    (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)

  • Marcel Boyer

    (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, UdeM - Université de Montréal - Université de Montréal)

  • Rachidi Kotchoni

    (University of Alberta - [-])

  • Jean-Pierre Ponssard

    (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)

The determination of optimal fines to deter the formation or continuation of cartels is a major objective of competition policy. We provide an analysis of static and dynamic frameworks to characterize the restitution and deterrence properties of fines: cartel stability depends on their ability to prevent deviation by firms, while the benefit of a deviation depends on the fines to be imposed in case of detection by the antitrust authority. We show that the proper consideration of the dynamics of competition has a major impact on the determination of optimal dissuasive fines: our results suggest that a clear majority of fines imposed by the European Commission in recent years meet the deterrence objective.

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Paper provided by HAL in its series Working Papers with number hal-00631432.

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Date of creation: 12 Oct 2011
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Handle: RePEc:hal:wpaper:hal-00631432
Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00631432/en/
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