nep-ind New Economics Papers
on Industrial Organization
Issue of 2013‒06‒09
one paper chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. The Distortive Effects of Antitrust Fines Based on Revenue By Spagnolo, Giancarlo; Bageri, Vasiliki; Katsoulacos, Yannis

  1. By: Spagnolo, Giancarlo (Stockholm Institute of Transition Economics); Bageri, Vasiliki (Athens University of Economics and Business); Katsoulacos, Yannis (Athens University of Economics and Business)
    Abstract: In most jurisdictions, antitrust fines are based on affected commerce rather than on collusive profits, and in some others, caps on fines are introduced based on total firm sales rather than on affected commerce. We uncover a number of distortions that these policies generate, propose simple models to characterize their comparative static properties, and quantify them with simulations based on market data. We conclude by discussing the obvious need to depart from these distortive rules-of-thumb that appear to have the potential to substantially reduce social welfare.
    Keywords: Antitrust; Deterrence; Fines; Law Enforcement
    JEL: K21 L40
    Date: 2012–12–08

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