Tuesday, February 12, 2008
Posted by D. Daniel Sokol
Zhijun Chen, University of East Anglia - Centre for Competition Policy, Zhejiang University - Department of Economics takes a stab at creating optimal cartel enforcement policy in his paper Cartel Organization and Antitrust Enforcement.
ABSTRACT: This paper develops a simple framework to characterize the dual-coalition structure of cartel organization and highlights the interactions between cartel organization and antitrust enforcement. We show that delegation of authority over decision rights can make cartels more robust to deviation, whereas this efficiency gain of cartel organization can be mitigated by the optimal design of leniency policy. In particular, this framework allows us to analyze the optimal design of individual and corporate leniency programs which contributes further to fight collusion.