The Anticompetitive Effects of the Antitrust Policy
Few scholars have seriously considered the possibility that the very existence of an antitrust law might make markets less competitive. In this chapter, we provide a selective review of this thought-provoking literature. The focus of our analysis is on contributions within the limits of the neo-classical theory of firms and markets, pointing out that antitrust legislation can hinder price/output competition. Following this literature, the introduction of antitrust penalties or leniency programmes can have the perverse effect of stabilizing cartels and increasing their size, as these policies may raise the costs of deviating and/or renegotiating a collusive agreement.
KeywordsNash Equilibrium Coalition Structure Grand Coalition Antitrust Authority Antitrust Policy
We would like to thank participants of the conference “The Economics of Imperfect Markets,” held in Rome (May 2008), for useful comments on an earlier draft of this work. Usual disclaimer applies.
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