Can collusion promote sustainable consumption and production? |
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| Institution: | 1. Amsterdam School of Economics and ACLE, University of Amsterdam, Plantage Muidergracht 12, Amsterdam 1018TV, The Netherlands;2. Coller School of Management, Tel Aviv University, Ramat Aviv, Tel Aviv 69978, Israel;1. University of Bayreuth, CESifo, and CEPR; Faculty of Law, Business and Economics, Universitätsstr. 30, Bayreuth D-95440, Germany;2. University of Würzburg, Chair for Information Economics and Contract Theory, Sanderring 2, Würzburg D-97070, Germany;1. Universidade Nova de Lisboa, Faculdade de Ciências e Tecnologia and CEFAGE, 2829-516 Caparica, Portugal;2. Department d’Economia and CREIP, Universitat Rovira i Virgili, Av. de la Universitat, 1, 43204 Reus, Spain;3. Universidade Católica Portuguesa, Católica Porto Business School, Rua Diogo de Botelho, 1327, 4169-005 Porto, Portugal;4. Universidade do Porto, Faculdade de Economia and CEF.UP, Rua Dr. Roberto Frias, 4200-464 Porto, Portugal;1. Faculdade de Ciências e Tecnologia and Center for Advanced Studies in Management and Economics, Universidade Nova de Lisboa, Caparica 2829-516, Portugal;2. Católica Porto Business School, Universidade Católica Portuguesa, Rua Diogo de Botelho, 1327, Porto 4169-005, Portugal;3. Faculdade de Economia and Center for Economics and Finance, Universidade do Porto, Rua Dr. Roberto Frias, Porto 4200-464, Portugal |
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| Abstract: | Several competition authorities consider the exemption of horizontal agreements among firms from antitrust liability if the agreements sufficiently promote public interest objectives such as sustainable consumption and production. We show that when consumers value sustainable products and firms choose investments in sustainability before choosing output or prices, coordination of output choices or prices boosts investments in sustainability and may even enhance consumer surplus when products are sufficiently close substitutes and the marginal cost of investment in sustainability is relatively low. By contrast, coordination of investments in sustainability leads to lower investments and harms consumers. |
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