Collusion, Managerial Incentives and Antitrust Fines

Laboratoire de Recherche en Gestion & Economie Working Paper 2017-06

34 Pages Posted: 6 Jul 2017

See all articles by Florence Thépot

Florence Thépot

University of Glasgow; Droit & Croissance (Rules for Growth)

Jacques Thépot

University of Strasbourg

Date Written: June 2, 2017

Abstract

Based on a price setting duopoly model, this paper argues that collusion on managerial incentive compensation may have the equivalent effect to collusion on prices. This paper also provides an analysis of the effect of different antitrust fines regimes in the context of a game between two companies each composed of two-level of decision making (the board of directors and the sales manager). The contribution of this paper is two-fold: it identifies "backstage arrangements" that may be used by companies in order to achieve monopoly outcome without entering into explicit price-fixing practices. It also highlights the inefficiency of fining regimes based on sales when companies have a multi-layer decision-making structure.

Keywords: duopoly, antitrust law, governance

JEL Classification: K21, L13, L41

Suggested Citation

Thépot, Florence and Thépot, Jacques, Collusion, Managerial Incentives and Antitrust Fines (June 2, 2017). Laboratoire de Recherche en Gestion & Economie Working Paper 2017-06. Available at SSRN: https://ssrn.com/abstract=2996945 or http://dx.doi.org/10.2139/ssrn.2996945

Florence Thépot (Contact Author)

University of Glasgow ( email )

5-9 The Square
University of Glasgow
Glasgow, G12 8QQ
United Kingdom

Droit & Croissance (Rules for Growth) ( email )

c/o Institut Louis Bachelier
29 place de la Bourse
Paris, 75002
France

Jacques Thépot

University of Strasbourg ( email )

Strasbourg 1
61, avenue de la Forêt Noire
Strasbourg, 67085
France

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