Tuesday, July 24, 2012
Posted by D. Daniel Sokol
Jay Pil Choi, Michigan State and Heiko A. Gerlach, University of Queensland - School of Economics discuss International Antitrust Enforcement and Multimarket Contact.
ABSTRACT: This article analyzes cartel formation and international antitrust enforcement when multinational firms operate in several jurisdictions with local antitrust authorities. We are concerned with how the sustainability of collusion in one local market is affected by the existence of collusion in other markets when they are linked by a negative demand relationship. The interdependence of cartel stability across markets leads to potential externalities in antitrust enforcement across jurisdictions. Local antitrust enforcement equilibrium enforcement may exhibit a nonmonotonicity in the degree of market integration. We compare it with globally optimal antitrust enforcement policy and discuss the role of international antitrust coordination.