Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Wednesday, November 18, 2009

Deterrence in Competition Law

Posted by D. Daniel Sokol

Paolo Buccirossi (LEAR), Lorenzo Ciari (Lear and EUI), Tomaso Duso (Humboldt University Berlin and WZB), Giancarlo Spagnolo (University of Rome Tor Vergata), and Cristiana Vitale (LEAR) focus on Deterrence in Competition Law.

ABSTRACT: This paper provides a comprehensive discussion of the deterrence properties of a competition policy regime. On the basis of the economic theory of law enforcement we identify several factors that are likely to affect its degree of deterrence: 1) sanctions and damages; 2) financial and human resources; 3) powers during the investigation; 4) quality of the law; 5) independence and 6) separation of power. We then discuss how to measure deterrence. We review the literature that uses surveys to solicit direct information on changes in the behavior of firms due to the threats posed by the enforcement of antitrust rules, and the literature based on the analysis of hard data. We finally argue that the most challenging task, both theoretically and empirically, is how to distinguish between “good” deterrence and “bad” deterrence.

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