TITLE:
Collusion Sustainability with Multimarket Contacts: Revisiting HHI Tests
AUTHORS:
Edmond Baranes, François Mirabel, Jean-Christophe Poudou
KEYWORDS:
Collusion; Multimarkets; HHI
JOURNAL NAME:
Theoretical Economics Letters,
Vol.2 No.3,
August
2,
2012
ABSTRACT: Our paper focuses on the relationship between market concentration and collusion sustainability in a framework of multimarket contacts. We consider two independent and symmetric markets in which a subset of firms are active in both markets. When firms are able to transfer market power from one market to another, firms have strong incentives to collude even in a highly competitive market. This result is relevant for competition policy since assessing market concentration using HHI index could be misleading in some situations.