Price-Fixing Policy

Forthcoming in International Journal of Industrial Economics (2018)

Havard John M. Olin Center for Law, Economics and Business, Discussion Paper No. 945, 01/2018

28 Pages Posted: 30 Jan 2018  

Louis Kaplow

Harvard Law School; National Bureau of Economic Research (NBER)

Date Written: January 16, 2018

Abstract

The prohibition against price fixing is competition law’s most important and least controversial provision. Yet there is far less consensus than meets the eye on what constitutes price fixing, and prevalent understandings cannot be reconciled with principles of oligopoly theory. This article (1) presents a fundamental reconceptualization of our understanding of horizontal agreements, (2) develops a systematic analysis of price-fixing policy that focuses on its deterrence benefits and chilling costs, and (3) compares this direct approach to commentators’ favored formulations that typically involve some sort of formalistic communications-based prohibition. By targeting a subset of means rather than the illicit ends, conventional formulations tend to impose liability in cases with lower deterrence benefits and greater chilling costs than those reached under a direct approach and to incur greater administrative costs as well.

Keywords: Price fixing, competition policy, antitrust, conspiracy, horizontal agreement, collusion, oligopoly

JEL Classification: D43, K21, L13, L41

Suggested Citation

Kaplow, Louis, Price-Fixing Policy (January 16, 2018). Havard John M. Olin Center for Law, Economics and Business, Discussion Paper No. 945, 01/2018. Available at SSRN: https://ssrn.com/abstract=3101088

Louis Kaplow (Contact Author)

Harvard Law School ( email )

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