Asymmetric Cartels - A Theory of Ring Leaders

39 Pages Posted: 12 Jun 2008

See all articles by Mattias Ganslandt

Mattias Ganslandt

Centre for European Law and Economics; Research Institute of Industrial Economics; University of Colorado at Boulder - Department of Economics

Lars Persson

Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR)

Helder Vasconcelos

Universidade do Porto - Faculdade de Economia (FEP)

Date Written: May 2008

Abstract

Many convicted cartels have a leader which is substantially larger than its rivals. In a setting where firms face indivisible costs of collusion, we show that: (i) firms may have an incentive to merge so as to create asymmetric market structures since this enables the merged firm to cover the indivisible cost associated with cartel leadership; and (ii) forbidding mergers leading to symmetric market structures can induce mergers leading to asymmetric market structures with a higher risk of collusion. Thus, these results have implications for the practice of the current EU and US merger policies.

Keywords: Cartels, Collusion, Cost Asymmetries, Merger Policy, Ring Leader

JEL Classification: D43, L41

Suggested Citation

Ganslandt, Mattias and Persson, Lars and Vasconcelos, Helder, Asymmetric Cartels - A Theory of Ring Leaders (May 2008). , Vol. , pp. -, 2008. Available at SSRN: https://ssrn.com/abstract=1143192

Mattias Ganslandt (Contact Author)

Centre for European Law and Economics ( email )

Rue du Luxembourg 3
Bruxelles, BE-1000
Belgium
+32 479 639 383 (Phone)
+32 2 888 9161 (Fax)

HOME PAGE: http://www.celec.eu

Research Institute of Industrial Economics ( email )

Box 55665
S-102 15 Stockholm
Sweden
+46 8 665 4500 (Phone)
+46 8 665 4599 (Fax)

HOME PAGE: http://www.industrialeconomics.se/mg

University of Colorado at Boulder - Department of Economics ( email )

Campus Box 256
Boulder, CO 80309
United States
303-4927588 (Phone)

HOME PAGE: http://www.mattiasganslandt.com

Lars Persson

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Helder Vasconcelos

Universidade do Porto - Faculdade de Economia (FEP) ( email )

Rua Dr. Roberto Frias
s/n
4200-464 Porto, 4200-464
Portugal

HOME PAGE: http://www.fep.up.pt/docentes/hvasconcelos

Register to save articles to
your library

Register

Paper statistics

Downloads
6
Abstract Views
731
PlumX Metrics