Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/30483
Authors: 
Choi, Jay Pil
Gerlach, Heiko A.
Year of Publication: 
2009
Series/Report no.: 
CESifo Working Paper 2632
Abstract: 
This paper analyzes dynamic cartel formation and antitrust enforcement when firms operate in demand-related markets. We show that cartel prosecution can have a knock-on effect: desisting a cartel in one market reduces profits and cartel stability and leads to the break-up of the cartel in the adjacent market. Cartel prosecution can also have a waterbed effect: desisting a cartel increases cartel stability in the adjacent market and induces cartel formation in previously competitive markets. We also consider policy implications of our analysis regarding an antitrust authority's investment decision in cartel enforcement.
Subjects: 
cartel formation
demand linkage
antitrust enforcement
JEL: 
L13
L41
D43
Document Type: 
Working Paper

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