New Economics Papers
on Law and Economics
Issue of 2013‒08‒10
one paper chosen by
Jeong-Joon Lee, Towson University


  1. The fight against cartels: a transatlantic perspective By Emilie Dargaud; Andrea Mantovani; Carlo Reggiani

  1. By: Emilie Dargaud (University of Lyon & CNRS, GATE); Andrea Mantovani (University of Bologna & IEB); Carlo Reggiani (University of Manchester)
    Abstract: The fight against cartels is a priority for antitrust authorities on both sides of the Atlantic. What differs between the EU and the US is not the basic toolkit for achieving deterrence, but to whom it is targeted. In the EU, pecuniary sanctions against the firm are the only instruments available to the Commission, while in the US criminal sanctions are also widely employed. The aim of this paper is to compare two different types of fines levied on managerial firms when they collude. We consider a profit based fine as opposed to a delegation based fine, with the latter targeting the manager in a more direct way. Under the assumption of revenue equivalence, we find that the delegation based fine, although distortive, is more effective in deterring cartels than the profit based one. When evaluating social welfare, a trade-off between deterrence and output distortion can arise. However, if the antitrust authority focuses on consumer surplus, then the delegation based fine is to be preferred.
    Keywords: Cartel policy, managerial firms, collusion
    JEL: K21 L44 K42 L21
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:ieb:wpaper:2013/6/doc2013-25&r=law

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