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Hidden collusion by decentralization: firm organization and antitrust policy

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  • Emilie Dargaud
  • Armel Jacques

Abstract

This paper develops a theory of the centralization of firms engaged in multi-market collusive agreements. A centralized organization (called the unitary or U-form) allows price coordination across several markets, whereas with decentralized (the multidivisional or M-form) firms the probability that the antitrust authority will find evidence of collusion on one market while investigating the other is lower. We show that the firm’s choice of internal structure depends to a large extent on product substitutability and the instruments used by the antitrust authority. Copyright Springer-Verlag Wien 2015

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  • Emilie Dargaud & Armel Jacques, 2015. "Hidden collusion by decentralization: firm organization and antitrust policy," Journal of Economics, Springer, vol. 114(2), pages 153-176, March.
    • Handle: RePEc:kap:jeczfn:v:114:y:2015:i:2:p:153-176
    DOI: 10.1007/s00712-013-0386-9
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    Cited by:

    1. Emilie Dargaud & Armel Jacques, 2015. "Hidden collusion by decentralization: firm organization and antitrust policy," Journal of Economics, Springer, vol. 114(2), pages 153-176, March.
    2. Emilie Dargaud & Armel Jacques, 2015. "Endogenous firms’ organization, internal audit and leniency programs," Working Papers 1524, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    3. Armel Jacques, 2024. "Increased fines for repeat offenders and conglomerate dynamics," TEPP Working Paper 2024-06, TEPP.
    4. Emilie Dargaud & Armel Jacques, 2020. "Slowdown antitrust investigations by decentralization," Working Papers halshs-02613352, HAL.
    5. Luca Lambertini & Giuseppe Pignataro, 2019. "On the social (sub)optimality of divisionalization under product differentiation," Journal of Economics, Springer, vol. 128(3), pages 225-238, December.
    6. Tsuyoshi Toshimitsu, 2017. "The optimal choice of internal decision-making structures in a network industry," Discussion Paper Series 166, School of Economics, Kwansei Gakuin University, revised Sep 2017.

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    More about this item

    Keywords

    Antitrust policy; Collusion; Organizational design ; M-form; U-form; L22; L41; K42;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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