Module 3
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).
¹ a.h. = academic hour (50 minutes)