Are Cartel Fines Optimal? Theory and Evidence from the European Union

25 Pages Posted: 19 Oct 2013 Last revised: 13 Apr 2016

See all articles by Marie-Laure Allain

Marie-Laure Allain

Ecole Polytechnique, Paris - Department of Economic Sciences

Marcel Boyer

CIRANO, Université de Monréal

Rachidi Kotchoni

Université Paris Nanterre

Jean Pierre Ponssard

Ecole Polytechnique, Paris - Laboratoire d'Econometrie

Date Written: July 18, 2013

Abstract

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

Allain, Marie-Laure and Boyer, Marcel and Kotchoni, Rachidi and Ponssard, Jean Pierre, Are Cartel Fines Optimal? Theory and Evidence from the European Union (July 18, 2013). CIRANO - Scientific Publications 2013s-24. Available at SSRN: https://ssrn.com/abstract=2342180 or http://dx.doi.org/10.2139/ssrn.2342180

Marie-Laure Allain

Ecole Polytechnique, Paris - Department of Economic Sciences ( email )

Palaiseau, 91128
France

Marcel Boyer (Contact Author)

CIRANO, Université de Monréal ( email )

1400-1130 Sharbrooke St. West
Montreal, Quebec H3A 2M8
Canada
514 985-4000 (Phone)
514-985-4039 (Fax)

HOME PAGE: http://www.cirano.qc.ca/~boyerm

Rachidi Kotchoni

Université Paris Nanterre ( email )

200 Avenue de la République
Nanterre, Hauts de Seine 92000
France

Jean Pierre Ponssard

Ecole Polytechnique, Paris - Laboratoire d'Econometrie ( email )

1 rue Descartes
Paris, 75005
France

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