23 Pages Posted: 1 Feb 2013
Date Written: January 2013
In a model in which firms can go bankrupt because of adverse market shocks or antitrust fines, we find that even large corporate fines may not be able to induce deterrence. Managerial penalties are thus needed. If the policy may be changed according to the state of the business cycle, then the optimal outcome can always be achieved through antitrust fines that are more severe in good times and more lenient in bad times. A time-independent policy may result in either too many bankruptcies or under-deterrence as compared to the optimal policy.
Keywords: antitrust fines, business cycles, managing incentives
JEL Classification: K14, K42, L13
Suggested Citation: Suggested Citation
Fabra, Natalia and Motta, Massimo, Antitrust Fines in Times of Crisis (January 2013). CEPR Discussion Paper No. DP9290. Available at SSRN: https://ssrn.com/abstract=2210260
This is a CEPR Discussion Paper. CEPR charges a fee of $5.00 for this paper.Login using your CEPR Personal Profile
File name: DP9290.
If you wish to purchase the right to make copies of this paper for distribution to others, please select the quantity.