Greater Disclosure Harms Cartels

The U.S. Department of Justice estimates that breaking up illegal cartels leads to consumer savings of at least 10% of annual sales in the relevant market. However, from the regulator’s perspective it is notoriously difficult to identify cartels. Even more difficult is to prove that some illegal conspiracy actually occurred: Do companies coordinate their actions by means of informal meetings in a hotel room in some remote location? Or do companies act after observing each other’s actions without exchanging a word or a text message? Both ways to coordinate actions may reduce consumer welfare, while only the former is punishable … Read more