What if Cartel Fines are not high enough? Implications on Deterrence and Productive Efficiency
DOI:
https://doi.org/10.55444/2451.7321.2013.v51.n1.11876Keywords:
collusion, productive efficiency, antitrust policy, deterrence, leniency programs, social welfareAbstract
I develop a model in which cartel firms allocate costly effort to activities related to productive efficiency and concealment: the higher the fine or the probability of inspection, the more biased the firms' effort allocation towards concealment. In this context, a fine increase can improve welfare through fewer cartels, but also reduce it through more inefficient surviving ones. The analysis suggests a carefully design of policy such that achieving a level of deterrence and productive (in)efficiency socially accepted. Within this framework, I also consider the implications of leniency programs. I show that leniency enhances incentives on deviation more that in standard models of collusion.
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Copyright (c) 2013 María C. Avramovich
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