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Competition Policy and Price Fixing$
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Louis Kaplow

Print publication date: 2013

Print ISBN-13: 9780691158624

Published to Princeton Scholarship Online: October 2017

DOI: 10.23943/princeton/9780691158624.001.0001

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Defining the Problem

Defining the Problem

(p.21) 2 Defining the Problem
Competition Policy and Price Fixing

Louis Kaplow

Princeton University Press

This chapter presents scenarios that illustrate the difficulty of defining agreement in a coherent fashion that successfully distinguishes pure interdependence (firms refrain from price cutting because of an expectation of retaliation derived from a shared appreciation of their circumstances)—deemed to be insufficient for liability—from classic cartels (firms meet secretly in hotel rooms to discuss prices and the consequences of cheating)—widely accepted to be more than sufficient. Of course, most legal categories give rise to line-drawing problems; it is notoriously difficult to distinguish similar shades of gray. The examples presented, however, are more corrosive because they demonstrate how hard it is to distinguish what many regard to be polar-opposite cases, analogous to black and white. The chapter also scrutinizes the concepts used in discussing horizontal agreements.

Keywords:   horizontal agreements, pure interdependence, classic cartels, polar-opposite cases, price cutting, cheating, liability

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