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The Fight against Cartels: A Transatlantic Perspective

Quaderni - Working Paper DSE N° 894

26 Pages Posted: 18 Jul 2013  

Emilie Dargaud

French National Center for Scientific Research (CNRS) - Institute of Economic Theory and Analysis (GATE); Université de la Réunion; University of Lyon 2

Andrea Mantovani

University of Bologna

Carlo Reggiani

University of Manchester

Multiple version iconThere are 3 versions of this paper

Date Written: July 16, 2013

Abstract

The fight against cartels is a priority for antitrust authorities on both sides of the Atlantic. What differs between the EU and the US is not the basic toolkit for achieving deterrence, but to whom it is targeted. In the EU, pecuniary sanctions against the firm are the only instruments available to the Commission, while in the US criminal sanctions are also widely employed. The aim of this paper is to compare two different types of fines levied on managerial firms when they collude.

We consider a profit based fine as opposed to a delegation based fine, with the latter targeting the manager in a more direct way. Under the assumption of revenue equivalence, we find that the delegation based fine, although distortive, is more effective in deterring cartels than the profit based one. When evaluating social welfare, a trade-off between deterrence and output distortion can arise. However, if the antitrust authority focuses on consumer surplus, then the delegation based fine is to be preferred.

Keywords: cartel policy, managerial firms, collusion

JEL Classification: K21, L44, K42, L21

Suggested Citation

Dargaud, Emilie and Mantovani, Andrea and Reggiani, Carlo, The Fight against Cartels: A Transatlantic Perspective (July 16, 2013). Quaderni - Working Paper DSE N° 894. Available at SSRN: https://ssrn.com/abstract=2294529 or http://dx.doi.org/10.2139/ssrn.2294529

Emilie Dargaud (Contact Author)

French National Center for Scientific Research (CNRS) - Institute of Economic Theory and Analysis (GATE) ( email )

93, chemin des Mouilles
Monnaie et Finance at Lyon
69130 Ecully cedex
France

Université de la Réunion ( email )

Campus du Moufia
15, avenue Rene Cassin BP 7151 -97 715
Saint-Denis messag cedex 9
United States

University of Lyon 2 ( email )

France

Andrea Mantovani

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40126
Italy

Carlo Reggiani

University of Manchester ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

HOME PAGE: http://staffprofiles.humanities.manchester.ac.uk/Profile.aspx?Id=carlo.reggiani

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