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Price-fixing policy

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  • Kaplow, Louis

Abstract

The prohibition against price fixing is competition law's most important and least controversial provision. Yet there is far less consensus than meets the eye on what constitutes price fixing, and prevalent understandings cannot be reconciled with principles of oligopoly theory. This article (1) presents a fundamental reconceptualization of our understanding of horizontal agreements, (2) develops a systematic analysis of price-fixing policy that focuses on its deterrence benefits and chilling costs, and (3) compares this direct approach to commentators’ favored formulations that typically involve some sort of formalistic communications-based prohibition. By targeting a subset of means rather than the illicit ends, conventional formulations tend to impose liability in cases with lower deterrence benefits and greater chilling costs than those reached under a direct approach and to incur greater administrative costs as well.

Suggested Citation

  • Kaplow, Louis, 2018. "Price-fixing policy," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 749-776.
    • Handle: RePEc:eee:indorg:v:61:y:2018:i:c:p:749-776
    DOI: 10.1016/j.ijindorg.2017.12.008
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    More about this item

    Keywords

    Price fixing; Competition policy; Antitrust; Conspiracy; Horizontal agreement; Collusion;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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