2017
DOI: 10.2139/ssrn.2993149
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Cartel Enforcement and Deterrence Over the Life of A Competition Authority

Abstract: This paper searches for evidence that, as a Competition Agency (CA) builds up experience in cartel enforcement, this feeds back into the business community to deter future cartel formation. We present two simple models, focussing respectively on composition and frequency deterrence, which describe how the feedback would work. The ideal outcome is that, over the long-run, the number of cartels detected by a successful CA will follow an inverted U-shaped time path: its propensity to detect increase, but the numb… Show more

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Cited by 4 publications
(3 citation statements)
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“…[6] uses a cartel birth-death model to make inferences on EU cartel detection rates. [1] applies a logic similar to Miller, to the long-term trends in cartel discoveries observed in an international panel of CAs. They find evidence of an inverse U-shape relationship, which they attribute to the gradual increase over time in deterrence as CAs become more successful in their enforcement.…”
Section: Accepted Manuscriptmentioning
confidence: 99%
See 1 more Smart Citation
“…[6] uses a cartel birth-death model to make inferences on EU cartel detection rates. [1] applies a logic similar to Miller, to the long-term trends in cartel discoveries observed in an international panel of CAs. They find evidence of an inverse U-shape relationship, which they attribute to the gradual increase over time in deterrence as CAs become more successful in their enforcement.…”
Section: Accepted Manuscriptmentioning
confidence: 99%
“…While we observe some of the cartels that form, we do not know the cartels that would have formed in the absence of competition law and enforcement. 1 The objective of this paper is to develop and implement a strategy for assessing whether competition law and enforcement is effective in deterring some cartels from forming and constraining the overcharges set by those cartels that do form. Using the standard theory of collusion, we first derive a testable implication if firms are taking into account anti-cartel enforcement when they decide on whether to form a cartel and what prices to charge.…”
mentioning
confidence: 99%
“…As described by Armoogum et al (2017), a competition authority may have a very low caseload either because it is ineffective in detecting anticompetitive behaviour or because it is so effective in deterring such behaviour that few cases remain to be detected. Likewise, a more effective enforcement and the resulting increase in deterrence leaves fewer cases still to be detected and then deterred.…”
Section: The Relation Between Detection and Deterrence Is Non-linearmentioning
confidence: 99%