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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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PRINTED FROM PRINCETON SCHOLARSHIP ONLINE (www.princeton.universitypressscholarship.com). (c) Copyright Princeton University Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in PRSO for personal use.date: 27 May 2022

Defining the Problem

Defining the Problem

Chapter:
(p.21) 2 Defining the Problem
Source:
Competition Policy and Price Fixing
Author(s):

Louis Kaplow

Publisher:
Princeton University Press
DOI:10.23943/princeton/9780691158624.003.0002

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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