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We examine how executive compensation can be designed to motivate product market collusion. We look at the 2013 decision to close several regional offices of the Department of Justice, which lowered antitrust enforcement for firms located near these closed offices. We argue that this made...
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The paper shows that collusion between the CEO of a firm and outside expert generates a conflict between ex-ante provision of effort and ex-post disclosures of bad news if the alliance tends to hide early warning signals that call for restructuring of firm's assets. This tension is resolved by a...
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: (1) cartel members are more likely to use RPE, especially in more concentrated markets; (2) conditional on using RPE …, cartel members include more economically similar firms in their peer group; (3) firms are disproportionately likely to drop … RPE from their executives' pay package within one year of their cartel being dissolved by a plausibly exogenous …
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