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IESE Research Papers,
IESE Business School

No D/854: Collusive networks in market-sharing agreements under the presence of an antitrust authority

Flavia Roldan ()
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Flavia Roldan: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN

Abstract: This paper studies how the presence of an antitrust authority affects market-sharing agreements made by firms. These agreements prevent firms from entering each other's market. The set of these agreements defines a collusive network, which is pursued by antitrust authorities. This article shows that while in the absence of the antitrust authority, a network is stable if its alliances are large enough when considering the antitrust authority, and more competitive structures can be sustained through bilateral agreements. Antitrust laws may have a pro-competitive effect, as they give firms in large alliances more incentives to cut their agreements at once.

Keywords: market-sharing; economic networks; antitrust authorit; oligopoly

JEL-codes: D43; K21; L41

34 pages, April 7, 2010

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