Autor: Coleff Joaquín*, Rubbini Camilo**
Institución: (*)UNLP, (**)Florida State University
Año: 2025
JEL: L41, L1
Resumen:
Collusion remains a recurrent feature of many markets, fueled by the promise of supracompetitive profits. A large body of theory predicts that cartels become less likely as the number of firms rises. We show, by contrast, that under broad conditions the incentives to collude can increase with market size. The mechanism is simple: competitive profits fall faster than collusive profits as additional firms enter, raising the relative reward from coordination. This mechanism challenges a core premise of U.S. and European antitrust policy and, at the same time, helps reconcile theory with empirical evidence of cartels that comprise many participants. The result holds for both price and quantity competition, regardless of whether the self-enforcement constraint binds.