Colluding Under The Radar: Achieving Collusion Through Vertical Exchange of Information

In the absence of antitrust regulations, rational profit-maximizing firms in an oligopoly may freely act in consort to reach a consensus and to maintain prices above the competitive level. However, in light of potential exposure to antitrust investigations and prospective heavy sanctions, firms attempt to achieve collusive outcomes without resorting to explicit agreements. One mechanism that may promote such tacit collusion is information-sharing; that is, the otherwise competing firms exchange their private information in order to set and maintain supra-competitive prices. Thus far, the attention of the antitrust authorities and scholars has focused on the phenomenon of horizontal information-sharing, i.e., the exchange of information between rival firms that operate at the same economic level. Contrary to this body of work, this article focuses on the effect of vertical information-sharing on the ability of the firms to collude. Recently, it has been shown that when competing retailers disclose their private information to a mutual manufacturer, the wholesale price set by the latter provides a signal to the retailers. This signal allows the retailers to fix prices without the necessity of any direct communication between them, thereby achieving a collusive outcome while avoiding the risk of being exposed to the scrutiny of the antitrust authorities. Another fascinating aspect of the collusion achieved through vertical informationexchange is that it can generate social costs higher than those of direct collusion. In other words, from the social welfare perspective, in certain instances—such as those discussed in this article—the social planner would be better off allowing competing firms to collude directly, rather than exchanging their private information via their mutual manufacturer. Therefore, understanding the neglected impact of vertical information-sharing is important not only for effective antitrust laws, but also for developing effective policies and regulations. Calling into focus the strategic behavior of competing retailers that may produce outcomes similar—or even severer—than those resulting from collusive agreement based on horizontal information-sharing, this article is the first attempt to address the legal implications of such a scheme, while integrating the findings of the economic literature. In particular, this article argues that: antitrust authorities should broaden the scope of their scrutiny to include vertical informationsharing; and case law permits such information-sharing to be condemned under the Sherman Act if it produces anticompetitive effects without counterbalancing procompetitive effects

Are EU Environmental Policies Too Demanding for New Members States?

In 2004, ten new states entered the European Union. Relative to the pre-2004 member states, these accession states have lower environmental standards, and some worry that it will be too demanding for these new EU members to fully comply with European environmental provisions. In this paper, we assess one rationale for such harmonization. Specifically, we analyze the determinants of environmental policies’ stringency, and show that differences in corruption levels are more important as explanatory factor when compared to income differentials. Since high levels of corruption characterize some countries in the enlarged EU, we argue that this is a good reason for an upward harmonization of environmental policies at the EU level.Corruption, European union, Environmental policy

Crises and the Myth of the Money Supply

Money, credit and capital are three fundamental economic terms that every high school student, at least, should understand. Yet we live in a society that does not treasure clarity about itself. Power prefers obscurity. So not only do few high school students understand these concepts, but few PhDs in economics do either. If you learn anything from this article, at least I hope you will understand these three. If you already know, or think you do, what money, credit and capital are (readers of this journal should know these), perhaps nonetheless you will be somewhat surprised by the simplicity, clarity and power of my treatment of these basic concepts. Most importantly, understanding these better makes it much easier to understand why economic crises occur. These are not primarily caused by errors in government policy, but by the process of capitalist competition between bears and bulls, involving the conflicting interests of creditors and debtors. Strategic power in a capitalist economy rests with those who advance and withdraw credit at the highest levels

European Competition Policy in International Markets

International audienceChanges in the institutional, technological and economic environment raise new challenges to the European competition policy. In this context, it is timely for European authorities to appraise the external dimension of the European competition policy as well as its articulation with current internal reforms. Globalisation can increase the costs of monitoring and seriously reduce the ability of European authorities to tackle cross-border anti-competitive conducts. In addition, conflicts are exacerbated by industrial policy motivations. As it is unlikely that the sole application of the territoriality and extraterritoriality principles to competition rules could yield an optimal international competition system, globalisation calls for higher levels and types of cooperation. Given that bilateral cooperation and especially the implementation of comity principles could be of no value when laws or interests are sources of international conflicts, three main paths could be therefore encouraged: The continuous harmonization of rules through the joint action of OECD and ICN; the higher cooperation in the confidential information exchange; the establishment of global anti-trust institutions. Although WTO is legitimate in judging questions related market access and entry barriers, it is less equipped to assess international hard core cartels or M&A reviews. As a substitute for WTO, a multilevel system, like the EU system, could be promoted. For political and pragmatic reasons, it could be composed in a first step of a hard core of countries like the EU, Japan and the U.S. It could be associated with the creation of an international Court of Justice for competition. In addition to these external reforms, some internal reforms could be required. Competition authorities have to develop further competition advocacy to give a higher priority to competition issues in other EU policies and national regulation. A parallel and complementary reform could consist in making the European competition agency independent from State Members' interference

Strengthening local government budgeting and accountability

In many developing and middle-income countries, decentralization reforms are promoting changes in governance structures that are reshaping the relationship between local governments and citizens. The success of these decentralization reforms depends on the existence of sound public financial systems both at the central and local levels. This paper focuses on the role of budgeting as a critical tool in reform efforts, highlighting problems that might impede successful local government budget development and implementation. The attainment of effective local government accountability and transparency is not an end itself, but rather it represents the means to support better decision-making on national and local budgeting. Community based schemes for enhancing local government accountability need to combine legal, political, and administrative mechanisms with proactive community involvement. Of particular importance are the legal and budgetary instruments that require input from local community members on certain local government decisions and instruments that increase accessibility for the press or the general public at large to information on government activities.National Governance,Public Sector Expenditure Analysis&Management,Debt Markets,Public Sector Corruption&Anticorruption Measures,Public Sector Economics&Finance

Supply chains and antitrust governance

Antitrust regulations are meant to promote fair competition in the market, but balancing administrative and legal costs with enforcement can be difficult when multilayered supply chains are involved. The canonical example of this challenge is the landmark Illinois Brick ruling, which limits antitrust damages to only the direct purchasers of a product; for instance, consumers can file antitrust claims against colluding retailers but not against colluding manufacturers—only retailers can file claims against manufacturers. This controversial ruling was meant to reduce legal costs, but it can clearly lead to missed enforcement opportunities. In this paper, we demonstrate how the Illinois Brick ruling interacts with contracts adopted in the supply chain, and we show that otherwise equivalent supply chain arrangements can have markedly different effects. In particular, we find that wholesale price, minimum order quantity, revenue sharing, and quantity discount contracts lead retailers to take legal action against manufacturers in the event of collusive behavior. However, the wholesale price plus fixed fee contract structure (also known as a two-part tariff or slotting fee contract) facilitates collusion among the manufacturers with retailers compensated by the fixed fee and not filing the antitrust litigation. We further demonstrate that collusion is more likely under high demand uncertainty and high competition at the retail level but is less likely under high competition at the manufacturer level. Our paper helps public enforcers identify market conditions conducive to antitrust violations

Coopetition as an emerging organisational strategy for supply chain resilience: an exploratory study of the UKCS oil and gas sector.

Coopetition, a form of inter-organisational relationship that combines competitive and collaborative theories, has gained the interests of academics and practitioners of inter-organisational studies. However, despite numerous extensive coopetition reviews, several questions remain unanswered - especially with regards to the formation of the strategy. Although studies have acknowledged that coopetition can occur unintentionally, particularly among organisations in pre-existing collaborative relationships, it remains unclear how or if the nature of formation affects the performance or outcome of the coopetitive relationship. It is therefore necesssary for continued research efforts into the study of coopetition as an emergent strategy. This research addresses issues in coopetition studies with the specific aim of uncovering the relationship between the formation of coopetition alliances and its performance. The study argues that antecedents for successful intentional coopetition may not apply in coopetition that emerges unintentionally. Using the UK Oil and Gas Industry as a case study, this research investigates some of the factors that can improve the performance of emergent coopetition, such as its management, form of governance and the role of dedicated alliance functions. The study compares the antecedents for successful deliberate coopetition with the performance of unintentional coopetition. Drawing upon research from inter-organisational studies and interviews of oil and gas industry experts, this study proposes some hypotheses and a conceptual model relating to the interactions of the governance structure, control mechanisms, and management on the performance of both intentional and unintentional coopetition. Additionally, it investigates the role of supply chain flexibility on coopetition performance. The structural equation model is tested using empirical data obtained through web-based questionnaires from 380 supply chain professionals in the oil and gas industry. The results of this study confirm that the management technique and control mechanisms have a significant effect on the outcome of both intentional and unintentional coopetition. In contrast, the flexibility of the supply chain has little impact on the performance of the alliance. The study contributes to inter-organisational studies by demonstrating that the presence of a dedicated alliance function and contractual agreements are critical antecedents in the formation of a coopetitive alliance, including emergent coopetition. The study also highlights its limitations and recommends areas for further research

Developing Methodologies to Assess Organized Crime Strategies in Latin America

Because of the increasingly organized and lethal nature of criminality in Latin America and the Caribbean, organized crime policy may be the single most important safeguard for regional security. A policy-relevant understanding requires disentangling these crimes’ many overlapping sources, removing embedded layers of methodological obstruction, and attuning responses with organized crime practice. Using embedded mixed methods to incorporate the ways in which available quantitative data and policies reflect the qualitative conditions of the agencies and processes that produce it, this report works to identify these broken, frayed or invisible inter-connections through a methodological framework as broadly flexible as the criminality it aims to measure and stop.https://digitalcommons.fiu.edu/jgi_research/1040/thumbnail.jp