Optimal Cartel Pricing in the Presence of an Antitrust Authority
نویسنده
چکیده
The dynamic behavior of a price-fixing cartel is explored when it is concerned about creating suspicions that a cartel has formed. The intertemporal structure of the price path is characterized and the effect of antitrust policy on the cartel’s steady-state price is explored. ∗I want to thank Bates, White and Ballantine for re-stimulating my interest in this topic. I’d also like to acknowledge the comments of Myong Chang, with whom I originally discussed this topic more than ten years ago, Jimmy Chan, Fred Chen, Massimo Motta, participants of presentations at Wake Forest, Toronto, Penn, Dept. of Justice, George Mason, Hopkins, and EARIE 2001, and the enthusiastic research assistance of Joe Chen. This research is supported by the National Science Foundation.
منابع مشابه
Cartel pricing dynamics in the presence of an antitrust authority
Cartel pricing is characterized when firms are concerned about creating suspicions that a cartel has formed. Balancing concerns about maintaining the stability of the cartel with those of avoiding detection, the cartel may either (i) gradually raise price to its steady-state level or (ii) gradually raise price and then have it decline to its steady-state level. Antitrust laws may have a pervers...
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The dynamic behavior of a price-fixing cartel is explored when it is concerned about creating suspicions that a cartel has formed. Consistent with preceding static theories, the cartel’s steady-state price is decreasing in the damage multiple and the probability of detection. However, contrary to those theories, it is independent of the level of fixed fines. It is also shown that the cartel pri...
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