Competition and Misconduct

91 Pages Posted: 2 Oct 2018 Last revised: 27 Apr 2022

See all articles by John E. Thanassoulis

John E. Thanassoulis

University of Warwick - Warwick Business School; UK Competition and Markets Authority; Oxford-Man Institute, University of Oxford

Multiple version iconThere are 3 versions of this paper

Date Written: April 27, 2022

Abstract

Misconduct is widespread; practices such as mis-selling, pump&dump, and money laundering cause harm while raising profits. This paper presents a mechanism which can determine what sorts of misconduct can be sustained in competitive equilibrium in concentrated markets, oligopoly settings, and in markets with many small competing firms. The model studied allows general demand and makes a distinction in types of ethical dilemma using current psychological understanding. The paper shows, for example, that markets with many small competing firms are not vulnerable to misconduct if firms respond to entry with niche strategies or if the ethical dilemma draws an emotional response.

JEL Classification: L13, L20, G40

Suggested Citation

Thanassoulis, John E., Competition and Misconduct (April 27, 2022). Journal of Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3246870 or http://dx.doi.org/10.2139/ssrn.3246870

John E. Thanassoulis (Contact Author)

University of Warwick - Warwick Business School ( email )

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Oxford-Man Institute, University of Oxford ( email )

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