CARTEL PROHIBITION MAY INCREASE PRICES
In this paper, we show that a policy that forbids cartels may benefit dominant firms, and hurt consumers. When cartels are prohibited, an incumbent monopolist can commit not to form a cartel should a new entrant enter the market. This reduces the entry threat, which implies that entry occurs less often, and the incumbent monopolist is less likely to set a limit price. Copyright © 2007 The Author; Journal compilation © 2007 Blackwell Publishing Ltd and The University of Manchester.
Year of publication: |
2007
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Authors: | HAAN, MARCO A. |
Published in: |
Manchester School. - School of Economics, ISSN 1463-6786. - Vol. 75.2007, 5, p. 557-568
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Publisher: |
School of Economics |
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