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Collusive Networks in Market‐Sharing Agreements in the Presence of an Antitrust Authority
Author(s) -
Roldán Flavia
Publication year - 2012
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1530-9134.2012.00352.x
Subject(s) - incentive , collusion , business , industrial organization , relevant market , international trade , international economics , law and economics , microeconomics , economics , monopoly
This paper examines how the presence of an antitrust authority (AA) affects market‐sharing agreements made by firms. These agreements prevent firms from entering each other’s markets. The set of agreements defines a collusive network, which is pursued by antitrust authorities. This paper shows that in the absence of an AA, a network is stable if its alliances are large enough, and in the presence of an AA, more competitive structures can be sustained through bilateral agreements. Antitrust laws may have a procompetitive effect, as they give firms in large alliances more incentives to cut their agreements at once.