Are Cartel Fines Optimal? Theory and Evidence from the European Union
25 Pages Posted: 19 Oct 2013 Last revised: 13 Apr 2016
Date Written: July 18, 2013
Deterring the formation or continuation of cartels is a major objective of antitrust policy. We develop a dynamic framework to characterize the compensation and deterrence properties of fines, based on the fact that cartel stability depends on the ability to prevent deviation, which itself depends in part on fines imposed in case of detection and conviction. We show that the proper consideration of cartel dynamics plays a major role in determining optimal deterrent fines. Our results suggest that a majority of fines imposed by the European Commission in recent years meet the deterrence objective.
The corrigendum to “Are cartel fines optimal? Theory and evidence from the European Union” can be found at http://ssrn.com/abstract=2762167.
Keywords: Cartels, fines, antitrust policy
JEL Classification: L13, L41, L42
Suggested Citation: Suggested Citation