The Distortive Effects of Antitrust Fines Based on Revenue

13 Pages Posted: 27 Nov 2013

See all articles by Vasiliki Bageri

Vasiliki Bageri

Athens University of Economics and Business

Yannis Katsoulacos

Athens University of Economics and Business

Giancarlo Spagnolo

Stockholm School of Economics (SITE); Centre for Economic Policy Research (CEPR); University of Rome 'Tor Vergata'; EIEF

Multiple version iconThere are 2 versions of this paper

Date Written: November 2013

Abstract

In most jurisdictions, antitrust fines are based on affected commerce rather than on collusive profits, and in some others, caps on fines are introduced based on total firm sales rather than on affected commerce. We uncover a number of distortions that these policies generate, propose simple models to characterise their comparative static properties and quantify them with simulations based on market data. We conclude by discussing the obvious need to depart from these distortive rules of thumb that appear to have the potential to substantially reduce social welfare.

Suggested Citation

Bageri, Vasiliki and Katsoulacos, Yannis and Spagnolo, Giancarlo, The Distortive Effects of Antitrust Fines Based on Revenue (November 2013). The Economic Journal, Vol. 123, Issue 572, pp. F545-F557, 2013. Available at SSRN: https://ssrn.com/abstract=2360355 or http://dx.doi.org/10.1111/ecoj.12079

Vasiliki Bageri (Contact Author)

Athens University of Economics and Business ( email )

No Address Available

Yannis Katsoulacos

Athens University of Economics and Business ( email )

Giancarlo Spagnolo

Stockholm School of Economics (SITE) ( email )

P.O. Box 6501
Stockholm
Sweden

HOME PAGE: http://https://sites.google.com/site/giancarlospagnoloshomepage/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Rome 'Tor Vergata' ( email )

Faculty of Economics - DEI
Via Columbia 2
Rome, RM 00133
Italy

EIEF ( email )

Via Due Macelli, 73
Rome, 00187
Italy

HOME PAGE: http://WWW.EIEF.IT

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