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Module 3:
Collusive Practices (the economics of art. 101) (12 a.h.1)


Outline of Course Contents


The functioning of a cartel

1. Central issues to be covered

    • Monitoring a collusive agreement

    • Enforcing a collusive agreement

    • Coordinating on a collusive outcome

    • Avoiding detection

    • Distinguishing traits of collusion

2. Organization of lectures

    • Basic theory of collusion

    • Market conditions conducive to collusion

    • Collusion with imperfect monitoring

    • Challenges with firm asymmetries

    • Information sharing and collusion
    • Properties of cartel price paths

    • Cartel formation and collapse

The design and impact of competition policy

1. Central issues to be covered

    • Detecting cartels

    • Prosecuting cartels

    • Penalizing cartels

    • Legal issues

2. Organization of lectures

    • Empirical methods for detecting cartels

    • Deterrence and penalties (government fines and customer damages)

    • Leniency and whistleblower programs

    • Explicit and tacit collusion: Economic and legal issues

Main references

• Harrington, Joseph E. Jr., "How Do Cartels Operate?," Foundations and Trends in Microeconomics, Volume 2,
  Issue 1, July 2006.

• Harrington, Joseph E. Jr., "Detecting Cartels," in Handbook of Antitrust Economics, P. Buccirossi, ed., The MIT
  Press, 2008.

• Kaplow, Louis and Carl Shapiro, "Antitrust," in Handbook of Law and Economics, Volume 2, A. M. Polinsky and
  S. Shavell, eds., Amsterdam: Elsevier, 2007.

• Levenstein, Margaret C. and Valerie Y. Suslow, "What Determines Cartel Success?," Journal of Economic
  Literature, 44 (2006), 43-95.

• Motta, Massimo, Competition Policy: Theory and Practice, Cambridge: Cambridge University Press, 2004
  (Chapter 4).

• Whinston, Michael D., Lectures on Antitrust Economics, Cambridge, Mass.: The MIT Press, 2006 (Chapter 2). 

Module 1 Module 2 Module 3 Module 4 Module 5 Module 6 Module 7 Module 8
1 a.h. = academic hour (50 minutes).

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