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)