The literature on cartel stability sidelines antitrust policy, whereas the literature on antitrust policy tends to … demonstrates that the optimal antitrust policy exploits the inherent instability of a cartel to reduce its size. … neglect issues of cartel stability. This paper attempts to connect these two interrelated aspects in the context of an …

An antitrust authority deters collusion using fines and a leniency program. It chooses the probability of an … investigation. Firms pick the degree of collusion: The more they collude, the higher are profits, but so is the probability of … inffective; it may even increase collusion. Increasing the probability of an investigation at low levels does not increase …