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Antitrust as facilitating factor for collusion

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Abstract

This paper examines collusion among firms whose discount factors are private information. Mutual uncertainty regarding intentions to restrict competition might undermine the possibility of tacit collusion. Firms that want to collude may, however, reveal their intentions by consciously acting in breach of antitrust laws. As antitrust activity makes explicit collusion costly in expected terms, it can potentially be (ab)used as signaling device. We show that the fight against cartels may indeed facilitate collusion.

    Research areas

  • antitrust enforcement, cartel formation, explicit collusion, tacit collusion, TACIT COLLUSION, MEETINGS, ENFORCEMENT, SMOKE-FILLED ROOMS, COMMUNICATION
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Details

Original languageEnglish
Pages (from-to)797-814
Number of pages18
JournalB E Journal of Economic Analysis & Policy
Volume15
Issue number2
DOIs
Publication statusPublished - Apr 2015