Abstract
Deterring the formation or continuation of cartels is a major objective of antitrust policy. We develop a dynamic framework to characterize the compensation and deterrence properties of fines, based on the fact that cartel stability depends on the ability to prevent deviation, which itself depends in part on fines imposed in case of detection and conviction. We show that the proper consideration of cartel dynamics plays a major role in determining optimal deterrent fines. Our results suggest that fines imposed by the European Commission in recent years meet the deterrence objective in a significant number of cases.
JEL codes
- L13: Oligopoly and Other Imperfect Markets
- L41: Monopolization • Horizontal Anticompetitive Practices
- L42: Vertical Restraints • Resale Price Maintenance • Quantity Discounts
Reference
Marie-Laure Allain, Marcel Boyer, Rachidi Kotchoni, and Jean-Pierre Ponssard, “Are cartel fines optimal? Theory and evidence from the European Union”, International Review of Law and Economics, vol. 42, June 2015, pp. 38–47.
Published in
International Review of Law and Economics, vol. 42, June 2015, pp. 38–47