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Fighting cartels: some economics of council regulation (EC) 1/2003

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  • Will, Birgit E.
  • Schmidtchen, Dieter

Abstract

This paper investigates the effectiveness of the new Council Regulation (EC) 1/2003 which replaces the mandatory notification and authorization system by a legal exception system. Effectiveness is operationalized via the two subcriteria compliance to Art. 81 EC Treaty and the probabilities of type I and type II errors committed by the European Commission. We identify four different types of Perfect Bayesian Nash Equilibria: fullcompliance, zero-compliance, positive-compliance and full-deterrence. We show that the Commission can, in principle, hit the full-compliance equilibrium, where the cartelizing firms fully obey the requirements of Art 81(3) EC Treaty and both error probabilities are zero.

Suggested Citation

  • Will, Birgit E. & Schmidtchen, Dieter, 2008. "Fighting cartels: some economics of council regulation (EC) 1/2003," CSLE Discussion Paper Series 2008-02, Saarland University, CSLE - Center for the Study of Law and Economics.
    • Handle: RePEc:zbw:csledp:200802
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    File URL: https://www.econstor.eu/bitstream/10419/28014/1/608696986.PDF
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    References listed on IDEAS

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    1. Barros, Pedro Pita, 2003. "Looking behind the curtain--effects from modernization of European Union competition policy," European Economic Review, Elsevier, vol. 47(4), pages 613-624, August.
    2. Schinkel, Maarten Pieter & Tuinstra, Jan, 2006. "Imperfect competition law enforcement," International Journal of Industrial Organization, Elsevier, vol. 24(6), pages 1267-1297, November.
    3. Steven Shavell, 2004. "The Appeals Process and Adjudicator Incentives," NBER Working Papers 10754, National Bureau of Economic Research, Inc.
    4. Verena Hahn, 2000. "Antitrust Enforcement: Abuse Control or Notification?," European Journal of Law and Economics, Springer, vol. 10(1), pages 69-91, July.
    5. Loss, Frederic & Malavolti-Grimal, Estelle & Verge, Thibaud & Berges-Sennou, Fabian, 2008. "European competition policy modernization: From notifications to legal exception," European Economic Review, Elsevier, vol. 52(1), pages 77-98, January.
    6. Steven Shavell, 2006. "The Appeals Process and Adjudicator Incentives," The Journal of Legal Studies, University of Chicago Press, vol. 35(1), pages 1-29, January.
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    Cited by:

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    2. Neuenfeldt, Sebastian & Röder, Norbert & Gocht, Alexander & Espinosa, Maria & Gomez y Paloma, S., 2014. "Using market share and multiplicative competitive interaction models to explain structural change in the German agricultural sector," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182955, European Association of Agricultural Economists.
    3. Katsoulacos, Yannis & Ulph, David, 2014. "Legal Uncertainty, Competition Law Enforcement Procedures and Optimal Penalties," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-12, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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    More about this item

    Keywords

    competition law; cartel law enforcement; legal exception; imperfect;
    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
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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