Collusion Sustainability with Multimarket Contacts: Revisiting HHI Tests | Zendy

Edmond Baranès | Zendy; François Mirabel | Zendy; JeanChristophe Poudou | Zendy

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Collusion Sustainability with Multimarket Contacts: Revisiting HHI Tests

Author(s) -

Edmond Baranès,

François Mirabel,

JeanChristophe Poudou

Publication year - 2012

Publication title -

theoretical economics letters

Language(s) - English

Resource type - Journals

eISSN - 2162-2078

pISSN - 2162-2086

DOI - 10.4236/tel.2012.23057

Subject(s) - collusion , market power , index (typography) , incentive , competition (biology) , industrial organization , microeconomics , sustainability , business , market concentration , economics , market structure , ecology , world wide web , computer science , biology , monopoly

Our paper focuses on the relationship between market concentration and collusion sustainability in a framework of multimarket contacts. We consider two independent and symmetric markets in which a subset of firms are active in both markets. When firms are able to transfer market power from one market to another, firms have strong incentives to collude even in a highly competitive market. This result is relevant for competition policy since assessing market concentration using HHI index could be misleading in some situations

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