INTERNATIONAL ANTITRUST ENFORCEMENT AND MULTIMARKET CONTACT*

This article analyzes cartel formation and international antitrust enforcement when multinational firms operate in several jurisdictions with local antitrust authorities. We are concerned with how the sustainability of collusion in one local market is affected by the existence of collusion in other markets when they are linked by a negative demand relationship. The interdependence of cartel stability across markets leads to potential externalities in antitrust enforcement across jurisdictions. Local antitrust enforcement equilibrium enforcement may exhibit a nonmonotonicity in the degree of market integration. We compare it with globally optimal antitrust enforcement policy and discuss the role of international antitrust coordination.     

Are leniency programs too generous?

I present a simple model of collusion in which the competition authority offers leniency rates contingent on the number of firms that report information. The optimal leniency policy involves what I refer to as a single informant rule—that is, leniency should be given only when a single firm reports information. The single informant rule allows to increase expected sanctions compared to the first informant rule, which overall improves cartel deterrence.     

State antitrust enforcement in the US and implications for small business entry and relocation

This article examines the impact of the important, yet little studied, state-level antitrust enforcement activity on entry and relocation behaviour by small US firms. Feinberg and Husted (2011) have shown that this enforcement, especially nonhorizontal cases, may be viewed by potential entrants as a negative aspect of the state business climate. However, they did not pursue a more disaggregate analysis of small firm entry behaviour; nor did they investigate different responses between manufacturing, wholesaling and retailing firms. Another related issue is the extent to which state cases filed in tandem with federal investigations have the same impact on establishment entry as do purely ‘independent’ cases. These considerations are dealt with in this article. The author uses annual state-level data from the Statistics of US Business to examine entry and relocation reactions to state antitrust enforcement by firms within three small-business categories: 1–19 employees; 20–99 employees; 100–499 employees. Generally speaking, the smallest retail and wholesale firms seem to favour vigorous antitrust activity, especially enforcement targeted against cartel behaviour by suppliers. The largest small-firm retailers and wholesalers (those with 100–499 employees) seem somewhat threatened by such activity, especially the more controversial nonhorizontal enforcement. However, it must be acknowledged that the effects on entry or relocation of small firms – both positive and negative – are quite small.     

Legal Principles in Antitrust Enforcement

We study antitrust enforcement that aims to channel price‐fixing incentives of cartels through setting fine schedules and detection levels. Fines obey legal principles, such as the punishment should fit the crime, proportionality, bankruptcy considerations, and minimum fines. Bankruptcy considerations limit maximum fines, ensure abnormal cartel profits, and impose a challenge for optimal antitrust enforcement. We derive the fine schedule and detection level that are constrained‐optimal under legal principles and sustainability of cartel prices. This fine schedule lies below the maximum fine, makes collusion on lower prices more attractive than on higher prices, and, hence, relates to the body of literature on marginal deterrence.     

纵向结构与投入品竞价合谋的悖论分析--日资配件企业“垄断协议”案的若干思考

2013年以来，跨国公司主导的价格合谋和价格歧视受到了中国反垄断机构的调查和处罚。文章以汽车配件行业中“日资企业”的价格垄断案为线索，构建了一个纵向股权关联下投入品价格合谋和集团内转移定价的理论模型，通过静态比较分析发现：关联企业之间的价格投标合谋并不符合“利润最大化”的目标，而是跨国公司作为实际控制人在上下游股权比例和盈利能力不对等的条件下，将下游整车合资企业的利润转移到上游配件企业的一种手段。文章从股权比例和企业运营模式的层面论证了利润转移假说的合意性，并结合主要细分市场的结构和利润关系，对“结构－合谋”原理所面临的现实矛盾进行了深入分析。文章的主要政策建议是：中国汽车产业的反垄断立法要实现从行为惩罚到规则干预的转化，要适当增加产业组织分析的证据以提高执法的科学水准，需要更多地使用合理推定原则以避免对企业理性行为的不当干预。     

反垄断调查的一个鉴别：一致性定价行为背后的差异与合谋

如何区分成本上涨时企业同时涨价的行为究竟是价格合谋还是寡头竞争的企业正常的价格调整行为？这是反垄断执法机构面临的一个难题。本文通过数理模型证明了无论企业进行伯川德竞争还是古诺竞争，寡头竞争的企业的定价随着成本的变化存在一个连续调整路径，而组成卡特尔的企业的定价则会随着成本的变化出现一个不连续的跳跃。因此反垄断执法机构在观察到企业的一致性定价行为之后，如果能从以往的价格监测纪录中发现这些企业在成本下跌时，价格存在着更大幅度的下调，则可以据此怀疑这些企业存在着价格合谋，应开展更深入的调查来搜集这些企业违反《反垄断法》的全面证据。     

Competitive prices as optimal cartel prices

In a linear oligopoly model with antitrust enforcement, the optimal cartel price converges to the competitive equilibrium price. The set of sustainable cartel prices does not shrink to the competitive price. We identify necessary conditions for this counter-intuitive convergence result.     

BARGAINING FAILURES AND MERGER POLICY

We study approval rules in a model where horizontal merger proposals arise endogenously as the outcome of negotiations among the firms in the industry. We make two main points. First, relatively inefficient merger proposals succeed with positive probability. That is, the negotiation process may result in a particular merger agreement despite the existence of an alternative one that would generate higher profits and higher consumer surplus. Second, the antitrust authority should optimally commit to an approval rule that is more stringent for all mergers than the optimal ex post rule.     

Merger policy in innovative industries

We analyze optimal merger policy in R&D-intensive industries with product innovation aiming to improve the quality of products. Our results suggest that a permissive merger policy is rarely optimal in high-tech industries when the antitrust authority considers a welfare standard that balances the impact of mergers on consumers’ surplus and firms’ profits. In particular, relative to a benchmark where the effects from R&D are absent, we show that the optimal merger policy should not be substantially more permissive in the presence of those effects from R&D.     

Legal tradition and antitrust effectiveness

This article uses cross-country data to empirically investigate through which channel legal origin can influence antitrust effectiveness. The evidence shows that the adaptability channel (legal flexibility) is more important for explaining antitrust effectiveness than the political channel (authority independence). The evidence also suggests that countries in which a judicial decision is a source of law will provide more legal flexibility and will adapt more easily to changing economic circumstances. They will therefore also have better enforcement of antitrust rules. On the other hand, a legal tradition that takes no formal notice of legal precedent will make the competition environment much less predictable. To the extent that these findings are true, one would expect competition agencies in Common law countries to perform better than those in Civil law countries.     

Effective Enforcement of a Transferable Emissions Permit System with a Self-Reporting Requirement

We propose an enforcement strategy to achieve complete compliance in a transferable emissions permit system when firms are required to provide reports of their own emissions. Like the literature on self-reporting in the enforcement of standards, we find that self-reporting can conserve monitoring costs, but for a different reason. In addition, we show that targeted monitoring—the practice of monitoring some firms more closely than others—is not necessary in a competitive permit system. Furthermore, tying penalties to the equilibrium permit price can stabilize the monitoring effort necessary to maintain full compliance in the face of permit price fluctuations.     

COMPETITION POLICY AND CARTEL SIZE

This article examines endogenous cartel formation in the presence of a competition authority. Competition policy is shown to make the most inclusive stable cartels less inclusive. In particular, small firms that might have been cartel members in the absence of a competition authority are no longer members. Regarding the least inclusive stable cartels, competition policy can either decrease or increase their size and, in the latter case, the collusive price can rise.     

On price taking behavior in a nonrenewable resource cartel–fringe game

We consider a nonrenewable resource game with one cartel and a set of fringe members. We show that (i) the outcomes of the closed-loop and the open-loop nonrenewable resource game with the fringe members as price takers (the cartel–fringe game à la Salant, 1976) coincide and (ii) when the number of fringe firms becomes arbitrarily large, the equilibrium outcome of the closed-loop Nash game does not coincide with the equilibrium outcome of the closed-loop cartel–fringe game. Thus, the outcome of the cartel–fringe open-loop equilibrium can be supported as an outcome of a subgame-perfect equilibrium. However the interpretation of the cartel–fringe model, where from the outset the fringe is assumed to be price taker, as a limit case of an asymmetric oligopoly with the agents playing Nash–Cournot, does not extend to the case where firms can use closed-loop strategies.     

The Prodigal Corporation: an Analysis on the Effectiveness of the ACCC's Immunity Policy for Cartel Conduct

We examine the impact of the ACCC's leniency policy (Immunity Policy) on cartel stability. The policy, by reducing the fines of the first cartel members who cooperate with competition authorities, can act to deter collusion. However, we find that care is needed in how a leniency policy is implemented. It is possible that the leniency policy can make collusion easier to sustain than in its absence. Further, the ACCC's Cooperation Policy, which applies to all parties who assist the Commission with an investigation, can act to undermine the effectiveness of the leniency policy.     

Endogenous cartel formation: Experimental evidence

In a Bertrand-oligopoly experiment, firms choose whether or not to engage in cartel-like communication and, if so, they may get fined by a cartel authority. We find that the four-firm industries form cartels more often than the duopolies because they gain less from a hysteresis effect after cartel disruption.     

Asymmetric Research Joint Ventures and Market Concentration

This paper studies two asymmetric R&D cooperation structures. In the first structure some firms in an industry organize a research joint venture (RJV) cartel while the remainder engage in independent R&D. In the other structure, each firm joins one of a number of competing RJV cartels. The findings indicate that cooperative R&D may lead to a more concentrated post-innovation industry than standard R&D competition owing to the technology advantage of the (large) cartel obtained from R&D co-operation. Under certain conditions these asymmetric structures are more efficient, but they result in a redistribution of income towards the firms in the (large) cartel.
JEL Classification Numbers: D43, L13, O31.     

JAPANESE ANTITRUST: RECONCILING THEORY AND EVIDENCE

Japanese antitrust law exempts a variety of vertical and horizontal restraints that remain closely regulated in the United States. Despite these dissimilar antitrust environments, however, market concentration, firms' exercise of market power, and deadweight loss from monopoly are highly similar in the two countries. The hypothesis that antitrust alters the relative mix of price to non-price competition rather than the absolute level that competition assumes might explain this empirical puzzle. Thus, this paper studies Japanese antitrust exemptions for resale price maintenance and export cartel associations to illustrate how adopting vertical and horizontal restraints has allowed Japanese firms to substitute towards forms of non-price competition better tailored to industry characteristics.     

Entrepreneurial finance and economic growth

This paper develops a theory of the centralization of firms engaged in multi-market collusive agreements. A centralized organization (called the unitary or U-form) allows price coordination across several markets, whereas with decentralized (the multidivisional or M-form) firms the probability that the antitrust authority will find evidence of collusion on one market while investigating the other is lower. We show that the firm’s choice of internal structure depends to a large extent on product substitutability and the instruments used by the antitrust authority.     

Private enforcement,corruption, and antitrust design

We examine how the rationale for enabling versus precluding private antitrust enforcement depends on whether antitrust enforcement is corruption-free or plagued by corruption. Corruption in courts affects the incentives to bring forth private antitrust lawsuits. This, in turn, along with corruption in antitrust agency enforcement, alters the incentives to commit antitrust violations. The social welfare effect of enabling private antitrust enforcement in the presence of corruption depends on whether corrupt officials in the ensuing bribery contests favor a particular firm and if so which one and to what extent. Under some circumstances, corruption actually increases the social desirability of private antitrust enforcement relative to the no-corruption scenario. Our analysis highlights that the effects of a given legal arrangement for antitrust enforcement critically depend on the corruption environment and, thus, that the appropriate design of antitrust institutions is context-specific.     

COLLUSION AND ANTITRUST DETECTION*

This paper investigates the impact of antitrust policy on the strategic choice of product specification when firms can collude with respect to prices, cannot collude with respect to location and may have their collusion ended if it is detected by the antitrust authority. Depending on the aggressiveness of the antitrust authority, different location configurations may emerge in equilibrium. Extremely aggressive and extremely lax policies lead to the least efficient outcomes while the configuration maximizing social welfare is obtained by an intermediate policy.