International Antitrust Enforcement and Multimarket Contact
Jay Pil Choi
Michigan State University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)
Heiko A. Gerlach
University of Queensland - School of Economics
International Economic Review, Vol. 53, Issue 2, pp. 635-658, 2012
This article analyzes cartel formation and international antitrust enforcement when multinational firms operate in several jurisdictions with local antitrust authorities. We are concerned with how the sustainability of collusion in one local market is affected by the existence of collusion in other markets when they are linked by a negative demand relationship. The interdependence of cartel stability across markets leads to potential externalities in antitrust enforcement across jurisdictions. Local antitrust enforcement equilibrium enforcement may exhibit a nonmonotonicity in the degree of market integration. We compare it with globally optimal antitrust enforcement policy and discuss the role of international antitrust coordination.
Date posted: May 23, 2012