Collusion Sustainability with Multimarket Contacts: Revisiting HHI Tests

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.

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E. Baranes, F. Mirabel and J. Poudou, "Collusion Sustainability with Multimarket Contacts: Revisiting HHI Tests," Theoretical Economics Letters, Vol. 2 No. 3, 2012, pp. 307-315. doi: 10.4236/tel.2012.23057.

Conflicts of Interest

The authors declare no conflicts of interest.

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