Hidden collusion by decentralization: firms ’ organization and antitrust policy∗

Abstract: This paper develops a theory concerning the centralization degree of firms involving in multimarket collusive agreements. We examine the impact of exogenous orga-nizational structures on collusive strategy. We then go on to consider the endogenous case. A centralized organization (unitary or U-form) allows price coordination on several markets whereas a decentralized one (multidivisional or M-form) decreases the probability that the antitrust authority will find evidence of collusion on one market during an investigation in the other. We show that this trade-off depends to a great extent on product substitutability and upon the instruments used by the antitrust authority. JEL classification: L22; L41; K4