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Antitrust Fines in Times of Crisis

23 Pages Posted: 1 Feb 2013  

Natalia Fabra

Universidad Carlos III de Madrid - Departamento de Economia

Massimo Motta

Universitat Pompeu Fabra

Date Written: January 2013

Abstract

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

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

Natalia Fabra (Contact Author)

Universidad Carlos III de Madrid - Departamento de Economia ( email )

E-28903 Getafe (Madrid)
Spain
+34-91 6249594 (Phone)
+34-91 6249329 (Fax)

Massimo Motta

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain

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