Working Paper: CEPR ID: DP11102
Authors: Maarten Pieter Schinkel; Yossi Spiegel
Abstract: Several competition authorities consider the exemption of horizontal agreements among firms from antitrust liability if the agreements sufficiently promote public interest objectives such as sustainable consumption and production. We show that when consumers value sustainable products and firms choose investments in sustainability before choosing output or prices, coordination of output choices or prices boosts investments in sustainability and may even enhance consumer surplus when products are sufficiently close substitutes and the marginal cost of investment in sustainability is relatively low. By contrast, coordination of investments in sustainability leads to lower investments and harms consumers.
Keywords: Antitrust; Collusion; Consumer Surplus; Public Interest; Sustainability
JEL Codes: K21; L13; L40; Q01
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Coordination of output choices or prices (D43) | Increased investments in sustainability (Q01) |
| Increased investments in sustainability (Q01) | Enhanced consumer surplus (D11) |
| Coordination of output choices or prices (D43) | Enhanced consumer surplus (D11) |
| Coordination of investments in sustainability (F64) | Lower overall investments (G19) |
| Coordination of investments in sustainability (F64) | Harm to consumer welfare (D18) |
| Production cartels (L12) | Increased sustainability investments (Q01) |
| Sustainability coordination (Q01) | Lower investments and consumer surplus (D11) |