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Topics in Competition Policy: Cartels, Leniency, and Price Discrimination
| Content Provider | Semantic Scholar |
|---|---|
| Author | Silbye, Frederik |
| Copyright Year | 2010 |
| Abstract | Cartel prices tend to increase gradually upon the formation of the cartel. This paper explains this observation by letting firms be uncertain about the true risk of being detected by the antitrust authorities. As time goes and the cartel remains undetected, it adjusts its risk estimate downwards using Bayesian inference. If the penalty is increasing in the cartel price, this leads to a gradually increasing price path. Even if the penalty is fixed, cartel prices might increase in a transitionary period as long as the cartel’s incentive compatibility constraint is binding. Finally, sufficient conditions are given such that prices are higher, the more uncertainty there is as regards the detection risk. JEL Classification: D43; D83; K21; L40. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | https://www.econ.ku.dk/forskning-og-publikationer/Publikationer/ph.d_serie_2007-/Ph.d._140.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
