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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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Oligopoly Theory and the Agreement Requirement

Oligopoly Theory and the Agreement Requirement

(p.174) 7 Oligopoly Theory and the Agreement Requirement
Competition Policy and Price Fixing

Louis Kaplow

Princeton University Press

This chapter assesses the relationship between modern oligopoly theory and the meaning of the agreement requirement. Because competition law seeks to regulate oligopoly behavior and, moreover, to ground such regulation in modern economic understandings, it would seem to follow that, if the law's notion of agreement reflects economic substance, the agreement requirement would correspond to a core distinction drawn in oligopoly theory. As it turns out, that theory, which is an application of game theory (particularly, that of repeated games), does have an explicit notion of agreement. But this notion refers to binding agreements and thus is irrelevant for present purposes because competition law renders horizontal price-fixing agreements void ab initio.

Keywords:   modern oligopoly theory, oligopoly theory, agreement requirement, oligopoly behavior, game theory

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