Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/204733 
Year of Publication: 
2012
Series/Report no.: 
SITE Working Paper No. 22
Publisher: 
Stockholm School of Economics, Stockholm Institute of Transition Economics (SITE), Stockholm
Abstract: 
In most jurisdictions, antitrust fines are based on affected commerce rather than on collusive profits, and in some others, caps on fines are introduced based on total firm sales rather than on affected commerce. We uncover a number of distortions that these policies generate, propose simple models to characterize their comparative static properties, and quantify them with simulations based on market data. We conclude by discussing the obvious need to depart from these distortive rules-of-thumb that appear to have the potential to substantially reduce social welfare.
Subjects: 
Antitrust
Deterrence
Fines
Law Enforcement
JEL: 
K21
L40
Document Type: 
Working Paper

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