Equilibrium Cartel Pricing in the Presence of an Antitrust Authority∗
نویسنده
چکیده
Price-fixing is characterized when firms are concerned about creating suspicions about collusion and bringing forth antitrust penalties. Antitrust laws have a complex effect on pricing as they influence the conditions determining the internal stability of the cartel. Dynamics are driven by two forces the sensitivity of detection to price movements causes a cartel to gradually raise price while the sensitivity of penalties to the price level induces the cartel to lower price over time in order to maintain the stability of the cartel. While antitrust laws can lower collusive prices, they can also raise them by making it easier for firms to collude. ∗I appreciate the comments of seminar participants at Cal Tech, UC-Berkeley, Stanford, and the Duke/UNC Theory Workshop. This research is supported by the National Science Foundation under grant SES-0209486.
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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متن کاملOptimal Cartel Pricing in the Presence of an Antitrust Authority
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 ...
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