Funding the Budget of a Competition Authority with Fines It Imposes
17 Pages Posted: 23 Oct 2009
Date Written: October 22, 2009
Most competition authorities in the world (in Europe, in particular) impose a suboptimal level of fines. In this paper two attempting explanations are proposed, based on accountability strategies and career concerns of governing bodies of these agencies. In order to compensate the distortion in their incentives, a proposal of funding the budget of competition authorities is advocated: these authorities could be partially financed by the fines they impose for anti-competitive behaviour. Surprisingly enough only very few antitrust authorities (Bulgaria, Portugal, Peru) are allowed to finance their own budget in this way. The implications of this proposal are addressed, paying attention also to the practical aspects of its implementation.
Keywords: Competition policy, fines, funding schemes, regulator incentives
JEL Classification: D73, K21, K42, L51, M48
Suggested Citation: Suggested Citation