Green antitrust conundrum: Collusion with social goals
Recent antitrust regulations in several countries have granted exemptions for collusion aimed at achieving environmental goals. Firms can apply for exemptions if collusion helps to develop or to implement costly clean technology, particularly in sectors like renewable energy, where capital costs are...
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creator | Hashimzade, Nigar Hatsor, Limor Jelnov, Artyom |
description | Recent antitrust regulations in several countries have granted exemptions for
collusion aimed at achieving environmental goals. Firms can apply for
exemptions if collusion helps to develop or to implement costly clean
technology, particularly in sectors like renewable energy, where capital costs
are high and economies of scale are significant. However, if the cost of the
green transition is unknown to the competition regulator, firms might exploit
the exemption by fixing prices higher than necessary. The regulator faces the
decision of whether to permit collusion and whether to commission an
investigation of potential price fixing, which incurs costs. We fully
characterise the equilibria in this scenario that depend on the regulator's
belief about the high cost of green transition. If the belief is high enough,
collusion will be allowed. We also identify conditions under which a
regulator's commitment to always investigate price fixing is preferable to
making discretionary decisions. |
doi_str_mv | 10.48550/arxiv.2411.06095 |
format | Article |
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collusion aimed at achieving environmental goals. Firms can apply for
exemptions if collusion helps to develop or to implement costly clean
technology, particularly in sectors like renewable energy, where capital costs
are high and economies of scale are significant. However, if the cost of the
green transition is unknown to the competition regulator, firms might exploit
the exemption by fixing prices higher than necessary. The regulator faces the
decision of whether to permit collusion and whether to commission an
investigation of potential price fixing, which incurs costs. We fully
characterise the equilibria in this scenario that depend on the regulator's
belief about the high cost of green transition. If the belief is high enough,
collusion will be allowed. We also identify conditions under which a
regulator's commitment to always investigate price fixing is preferable to
making discretionary decisions.</description><identifier>DOI: 10.48550/arxiv.2411.06095</identifier><language>eng</language><creationdate>2024-11</creationdate><rights>http://creativecommons.org/licenses/by/4.0</rights><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>228,230,780,885</link.rule.ids><linktorsrc>$$Uhttps://arxiv.org/abs/2411.06095$$EView_record_in_Cornell_University$$FView_record_in_$$GCornell_University$$Hfree_for_read</linktorsrc><backlink>$$Uhttps://doi.org/10.48550/arXiv.2411.06095$$DView paper in arXiv$$Hfree_for_read</backlink></links><search><creatorcontrib>Hashimzade, Nigar</creatorcontrib><creatorcontrib>Hatsor, Limor</creatorcontrib><creatorcontrib>Jelnov, Artyom</creatorcontrib><title>Green antitrust conundrum: Collusion with social goals</title><description>Recent antitrust regulations in several countries have granted exemptions for
collusion aimed at achieving environmental goals. Firms can apply for
exemptions if collusion helps to develop or to implement costly clean
technology, particularly in sectors like renewable energy, where capital costs
are high and economies of scale are significant. However, if the cost of the
green transition is unknown to the competition regulator, firms might exploit
the exemption by fixing prices higher than necessary. The regulator faces the
decision of whether to permit collusion and whether to commission an
investigation of potential price fixing, which incurs costs. We fully
characterise the equilibria in this scenario that depend on the regulator's
belief about the high cost of green transition. If the belief is high enough,
collusion will be allowed. We also identify conditions under which a
regulator's commitment to always investigate price fixing is preferable to
making discretionary decisions.</description><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2024</creationdate><recordtype>article</recordtype><sourceid>GOX</sourceid><recordid>eNpjYJA0NNAzsTA1NdBPLKrILNMzMjE01DMwM7A05WQwcy9KTc1TSMwrySwpKi0uUUjOzyvNSykqzbVScM7PySktzszPUyjPLMlQKM5PzkzMUUjPT8wp5mFgTQNSqbxQmptB3s01xNlDF2xDfEFRZm5iUWU8yKZ4sE3GhFUAANa4M3c</recordid><startdate>20241109</startdate><enddate>20241109</enddate><creator>Hashimzade, Nigar</creator><creator>Hatsor, Limor</creator><creator>Jelnov, Artyom</creator><scope>ADEOX</scope><scope>GOX</scope></search><sort><creationdate>20241109</creationdate><title>Green antitrust conundrum: Collusion with social goals</title><author>Hashimzade, Nigar ; Hatsor, Limor ; Jelnov, Artyom</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-arxiv_primary_2411_060953</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2024</creationdate><toplevel>online_resources</toplevel><creatorcontrib>Hashimzade, Nigar</creatorcontrib><creatorcontrib>Hatsor, Limor</creatorcontrib><creatorcontrib>Jelnov, Artyom</creatorcontrib><collection>arXiv Economics</collection><collection>arXiv.org</collection></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext_linktorsrc</fulltext></delivery><addata><au>Hashimzade, Nigar</au><au>Hatsor, Limor</au><au>Jelnov, Artyom</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Green antitrust conundrum: Collusion with social goals</atitle><date>2024-11-09</date><risdate>2024</risdate><abstract>Recent antitrust regulations in several countries have granted exemptions for
collusion aimed at achieving environmental goals. Firms can apply for
exemptions if collusion helps to develop or to implement costly clean
technology, particularly in sectors like renewable energy, where capital costs
are high and economies of scale are significant. However, if the cost of the
green transition is unknown to the competition regulator, firms might exploit
the exemption by fixing prices higher than necessary. The regulator faces the
decision of whether to permit collusion and whether to commission an
investigation of potential price fixing, which incurs costs. We fully
characterise the equilibria in this scenario that depend on the regulator's
belief about the high cost of green transition. If the belief is high enough,
collusion will be allowed. We also identify conditions under which a
regulator's commitment to always investigate price fixing is preferable to
making discretionary decisions.</abstract><doi>10.48550/arxiv.2411.06095</doi><oa>free_for_read</oa></addata></record> |
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title | Green antitrust conundrum: Collusion with social goals |
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