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Tilburg Law and Economics Center

TILEC supports and stimulates academic research on the governance of economic activity. It fosters academically path breaking and practically relevant research and aims to be a leading center worldwide.

TILEC Work in Progress: Evgenia Motchenkova

Penalizing on the Basis of the Severity of the Offence: A Sophisticated Revenue-Based Cartel Penalty
10:45-11:45, M 1003

Evgenia Motchenkova is assistant professor in industrial organization. She received her PhD from Tilburg University. She is also research fellow at Tinbergen Institute and TILEC (Tilburg Law and Economics Center).

In Katsoulacos, Motchenkova and Ulph (2015) we examined the welfare properties of a number of monetary penalty regimes for tackling cartels, including revenue-based penalties (the most widely used regime), illegal gains-based penalties, and overcharge-based penalties. We showed that the latter regime welfare-dominates the others. However it is subject to criticism on the grounds of legal uncertainty and high implementation costs. In this paper we focus on analyzing an alternative regime: a sophisticated revenue-based penalty regime in which the penalty base is the revenue of the cartel but the penalty rate depends on (and increases with) the cartel overcharge rate. Thus, in contrast to the currently employed simple revenue-based regime, the proposed regime penalizes cartels taking also into account the severity of their offense in terms of the height of their overcharge. We show that this hybrid regime can effectively replicate the desirable welfare properties of an overcharge-based penalty structure while having very low levels of legal uncertainty and implementation costs.

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When: 17 October 2018 10:45

End date: 17 October 2018 11:45