Can Collusion Promote Sustainable Consumption and Production?
International Journal of Industrial Organization, 53, 2017, 371-398
37 Pages Posted: 19 Dec 2015 Last revised: 28 Mar 2018
Date Written: February 1, 2016
Several competition authorities consider the exemption of horizontal agreements among firms from antitrust liability if the agreements sufficiently promote public interest objectives such as sustainable consumption and production. We show that when consumers value sustainable products and firms choose investments in sustainability before choosing output or prices, coordination of output choices or prices boosts investments in sustainability and may even enhance consumer surplus when products are sufficiently close substitutes and the marginal cost of investment in sustainability is relatively low. By contrast, coordination of investments in sustainability leads to lower investments and harms consumers.
Keywords: Sustainability, public interest, collusion, antitrust, consumer surplus
JEL Classification: K21, L13, L40, Q01
Suggested Citation: Suggested Citation