Can Collusion Promote Sustainable Consumption and Production?

Schinkel, Maarten Pieter; Spiegel, Yossi

doi:10.2139/ssrn.2704259

Cited by 10 publications

(26 citation statements)

References 16 publications

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“…Instead our experimental results suggest that CSR coordination may induce firms to collude on less CSR than they otherwise would. This is consistent with Schinkel & Spiegel (2017), who establish that the coordination of product standards reduces incentives to invest in greener products, despite consumers' willingness to pay for them. An illustrative case in point is the 1920s international Phoebus cartel of lightbulb producers, including General Electric, Osram, and Philips, that agreed to reduce the lifespan of lightbulbs.…”

Section: Resultssupporting

confidence: 86%

“…This sequential set-up follows the way product differentiation is modeled in the industrial organization literature of semi-collusion that is used to study the policy of allowing coordination on product quality. See Schinkel & Spiegel (2017). 16 In Bartling et al (2015), both the number of firms and the number of consumers is larger than in ours.…”

Section: Design and Procedures Experimentsmentioning

confidence: 63%

“…Before participants interacted in the market games, we measured their 'third-party preferences' on the basis of a variant of Yang et al's (2016) social-preferences test. 7 See Schinkel & Spiegel (2017) for references and an extensive discussion. 8 See Competition Policy International, EU: MEPs demands fundamental overhaul of competition policy, February 4, 2019.…”

Section: Introductionmentioning

confidence: 99%

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Can Collusion Promote Corporate Social Responsibility? Evidence from the Lab

2019

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Market competition can erode socially responsible behavior, suggesting that allowing collusive agreements regarding corporate social responsibility (CSR) may promote public interest objectives such as fair trade and environmental standards. We study this idea in a vertical product differentiation model, extended with firms that partly internalize external effects, and laboratory experiments. Firms choose between offering a 'fair' and an 'unfair' product that imposes a negative externality on a third party. The treatment is to allow firms to coordinate on the type of good they sell, while remaining in price competition. We find that CSR collusion diminishes product variety and polarizes. More of the same product type, fair and unfair, is offered, without a significant impact on the fraction of fair goods traded. Instead, thirdparty preferences are the more important driver of socially responsible behavior. We highlight implications for competition policy, where cartels may be exempted on sustainability grounds.

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Section: Resultssupporting

confidence: 86%

Section: Design and Procedures Experimentsmentioning

confidence: 63%

Section: Introductionmentioning

confidence: 99%

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Can Collusion Promote Corporate Social Responsibility? Evidence from the Lab

2019

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“…whether competition authorities should take into account public interests above competition objectives. Existing works focused on the issue of environmental protection assume that …rms'contributions to environmental protection are voluntary (Hashimzade and Myles (2017), Schinkel and Toth (2019), Spiegel andSchinkel (2017), Treuren andSchinkel (2018)). In contrast, our analysis states that …rms' decisions are constrained by environmental liability, and suggests that this raises coordination issues between Courts (focused on the incentives to precautionary expenditures) and Competition Authorities (focused on consumers surplus), in order to improve environment protection measures.…”

Section: Introductionmentioning

confidence: 99%

Should environment be a concern for competition policy when firms face environmental liability?

Charreire

Langlais

2021

International Review of Law and Economics

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This paper considers an oligopoly where …rms produce a joint and indivisible environmental harm as a by-product of their output. We …rst analyze the e¤ects on the equilibrium of alternative designs in environmental liability law, secondly, we discuss the rationale for "non-conventional" competition policies, i.e. more concerned with public interest such as the preservation of human health or environment. We study …rms decisions of care and output under various liability regimes (strict liability vs negligence) associated with alternative damages apportionment rules (per capita vs market share rule), and in some cases with damages multipliers. We …nd that basing an environmental liability law on the combination of strict liability, the per capita rule, and an "optimal" damages multiplier, is consistent with a conservative competition policy, focused on consumers surplus, since, weakening …rms' market power also increases aggregate expenditures in environment preservation and social welfare. In contrast, a shift to the market share rule, or to a negligence regime, may be consistent with a restriction of competition, since …rms'entry may instead lead to a decrease in aggregate environmental expenditures and losses of social welfare. Nevertheless the …ne tuning of the policy requires speci…c information from a Competition Authority, which we discuss as well.

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“…Awaya & Krishna (2016) models how cheap talk within a cartel makes equilibria possible with near-perfect collusion by improving monitoring. 12 Schinkel & Spiegel (2016) shows that when consumers value sustainable products and rms choose investments in sustainability before output, coordination of sustainability actually reduces it. A production cartel will invest more in sustainability, but harms consumers.…”

Section: Introductionmentioning

confidence: 99%

Balancing the Public Interest-Defense in Cartel Offenses

Schinkel

Tóth

2016

SSRN Journal

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Horizontal agreements may be exempted from cartel law if they advance certain public interests, such as public health or the environment, enough to compensate the consumers damaged by their anti-competitive eects. We formalize the balancing of cartel unit price overcharges on a private good against the willingness of its consumers to pay for an accompanying public good. A cartel could improve upon the classic under-provision in competitive equilibrium, even though it crowds out private contributions. We show however that the required compensating public good level in no-contributor economies decreases in each consumer's willingness to pay, which is contrary to the Samuelson condition. With at least one private contributor, the policy can never attain rst-best. Moreover, by self-selection the policy asks those individuals with the lowest willingness to pay for the public good to pay most, which is orthogonal to Lindahl-pricing. As a result, the public interest-cartel is typically not sustainable. To identify a genuine public interest-defense requires more information than a competition authority can reasonably be expected to have.

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Can Collusion Promote Sustainable Consumption and Production?

Cited by 10 publications

References 16 publications

Can Collusion Promote Corporate Social Responsibility? Evidence from the Lab

Can Collusion Promote Corporate Social Responsibility? Evidence from the Lab

Should environment be a concern for competition policy when firms face environmental liability?

Balancing the Public Interest-Defense in Cartel Offenses

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