Collusion Sustainability with Multimarket Contacts: Revisiting HHI Tests

¹ LAMETA UMR 5474, Montpellier, France

² LAMETA UMR 5474, Montpellier, France

³ LAMETA UMR 5474, Montpellier, France

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.

KeywordsCollusionMultimarketsHHI

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Collusion Sustainability with Multimarket Contacts: Revisiting HHI Tests

Abstract

References (7)