Nationalistic Bias in Collusion Prosecution: The Case for International Antitrust Agreements

51 Pages Posted: 1 Apr 2017 Last revised: 3 Dec 2018

See all articles by Filomena Garcia

Filomena Garcia

Indiana University; ISEG - Technical University of Lisbon; UECE - Research Unit in Economics and Complexity

Jose Manuel Paz y Miño

Indiana University Bloomington

Gustavo Torrens

Indiana University

Date Written: December 2018

Abstract

We study the incentives of competition authorities to prosecute collusive practices of domestic and foreign firms in a multi-market contact model between two firms operating in two countries. In equilibrium, the country of origin of the firms might prefer to delay prosecution to protect pro ts in foreign markets. This strategic delay is valuable because prosecution in the country of origin of the firms activates an information spillover that triggers prosecution in the foreign country. Prosecution delays, however, are not optimal from the point of view of global welfare, something that could be solved by integrating the competition authorities. With multiple industries, both countries can be better off under integration or signing an international antitrust agreement.

Keywords: Multi-Market Collusion, Antitrust Policy, Strategic Prosecution, International Antitrust Agreements

JEL Classification: F23, F53, L41, K21

Suggested Citation

Garcia, Filomena and Paz y Miño, Jose Manuel and Torrens, Gustavo, Nationalistic Bias in Collusion Prosecution: The Case for International Antitrust Agreements (December 2018). Available at SSRN: https://ssrn.com/abstract=2943073 or http://dx.doi.org/10.2139/ssrn.2943073

Filomena Garcia

Indiana University ( email )

Wylie Hall
Bloomington, IN 47405-6620
United States

ISEG - Technical University of Lisbon ( email )

R. Miguel Lupi, 20
Lisbon, 1200
Portugal

UECE - Research Unit in Economics and Complexity ( email )

Rua Miguel Lupi, 20
Lisboa, 1200-781
Portugal

Jose Manuel Paz y Miño

Indiana University Bloomington ( email )

100 South Indiana Ave.
Bloomington, IN 47405
United States

Gustavo Torrens (Contact Author)

Indiana University ( email )

Wylie Hall, 100 S Woodland Ave
Bloomington, IN 47405-7104
United States
8128568131 (Phone)

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