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Endogenous Cartel Organization and Antitrust Fine Discrimination

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  • Tim Reuter

    (RBB Economics)

Abstract

Third parties such as trade associations often assist cartels to distinguish defecting from complying behaviour, whereby cartel persistence can increase. We investigate how cartels sort themselves into different forms of cartel organization and whether enforcement can be improved by setting fines contingent on the organizational form. A fine reduction for firms that operate without third party assistance causes some cartels to switch to a less persistent organizational form. Two drawbacks of this fine differentiation are that new cartels will arise and that the existing cartels will become more persistent as the need to punish defectors decreases.

Suggested Citation

  • Tim Reuter, 2017. "Endogenous Cartel Organization and Antitrust Fine Discrimination," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 51(3), pages 291-313, November.
    • Handle: RePEc:kap:revind:v:51:y:2017:i:3:d:10.1007_s11151-017-9574-z
    DOI: 10.1007/s11151-017-9574-z
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    More about this item

    Keywords

    Antitrust enforcement; Cartel organization; Marginal deterrence; Trade associations;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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