Antitrust & Competition Policy Blog

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Levin College of Law

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Friday, February 28, 2014

Multi‐Market Collusion with Demand Linkages and Antitrust Enforcement

Jay Pil Choi, Michigan State University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute) and Heiko A. Gerlach, University of Queensland - School of Economics discuss Multi‐Market Collusion with Demand Linkages and Antitrust Enforcement.

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: bringing down 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: disrupting a cartel increases cartel stability in the adjacent market and induces cartel formation in previously competitive markets. We discuss the impact of dynamic cartel formation on consumer surplus, explore antitrust spillovers, the optimal scope of antitrust interventions and cartel formation with local firms.

http://lawprofessors.typepad.com/antitrustprof_blog/2014/02/multimarket-collusion-with-demand-linkages-and-antitrust-enforcement.html

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Comments

Does the 2/21/14 statement by Transportation Intermediaries Association President Robert Voltmann in the comment below constitute evidence that collective rate making is happening in the trucking industry in violation of US Antitrust Law?

"There is no more mystery to pricing. Shippers and brokers at the meetings all talked about how pricing tools are being used to create more visibility in pricing. This visibility is leading to more collaboration in pricing."

TIA President Robert Voltmann
February 21, 2014

So far, our poll is pretty much split down the middle as currently, 53% of poll respondents seem to be expressing at least some degree of concern, whereas 47% seem to think Mr. Voltmann's statement does not constitute evidence that collective rate making is happening in the trucking industry in violation of US Antitrust Law. What do you think?

VOTE HERE

http://www.linkedin.com/groups/Does-2-21-14-statement-4293910.S.5843868337737588740?qid=65ab2622-208b-41e2-ab01-7c75fc3f4d82&goback=.gmr_4293910

Posted by: James Lamb | Feb 28, 2014 3:21:49 AM

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