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STICERD Industrial Organisation Seminars

Colluding against Environmental Regulation

Jorge Alechilet (University of the Andes), joint with Cuicui Chen, Jing Li, Mathias Reynaert

Monday 07 November 2022 12:30 - 14:00

Many of our seminars and public events this year will continue as in person or as hybrid (online and in person) events. Please check our website listings and Twitter feed @STICERD_LSE for updates.

Unless otherwise specified, in-person seminars are open to the public.

Those unable to join the seminars in-person are welcome to participate via zoom if the event is hybrid.

About this event

We study collusion among firms against imperfectly monitored environmental regulation. Firms increase variable profits by violating regulation and reduce expected noncompliance penalties by violating jointly. We consider a case of three German automakers colluding to reduce the effectiveness of emission control technology. By estimating a structural model of the European automobile industry from 2007 to 2018, we find that the collusion lowers expected noncompliance penalties substantially and increases buyer and producer surplus. Welfare decreases by EUR 0.73--2.51 billion because of increased pollution. We show how environmental policy design and antitrust play complementary roles in preventing noncompliance.

Industrial Organisation seminars are held on Mondays in term time at 12:30-14:00, in person in SAL 3.05, unless specified otherwise.

Seminar organiser: Alessandro Gavazza.

For further information please contact Sadia Ali:

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