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EFFECT OF FIRM ORGANIZATIONAL STRUCTURE ON INCENTIVES TO ENGAGE IN PRICE FIXING
Author(s) -
JOYCE JON M.
Publication year - 1989
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/j.1465-7287.1989.tb00573.x
Subject(s) - price fixing , incentive , collusion , microeconomics , economics , organizational structure , decision maker , theory of the firm , industrial organization , financial economics , business , management , management science
This article examines price fixing and bid rigging by applying the theory of the economics of crime to explain the calculus of the individual decision maker in the firm. This approach departs somewhat from the traditional approach to investigations of collusion. The latter has emphasized market structure and firm interrelationships while it has ignored the characteristics of the firm itself. But analyses ignoring firm organizational and financial structure are incomplete insomuch as these factors are crucial to the incentives and costs that the decision maker confronts. This paper offers an alternative approach in which price‐fixing and bid‐rigging offenders' prominent characteristics apparently are mirrored in defendant firms and individuals that the Antitrust Division has prosecuted recentlv.