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Exploitation and Induced Tacit Collusion: A Classroom Experiment of Corporate Leniency Programs

In: THE ANALYSIS OF COMPETITION POLICY AND SECTORAL REGULATION

Author

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  • Jeroen Hinloopen
  • Adriaan R. Soetevent

Abstract

Recent laboratory experiments support the popular view that the introduction of corporate leniency programs has significantly decreased cartel activity. We develop a classroom experiment that captures key features of leniency programs. Our treatments include an exploitable and a non-exploitable leniency program to highlight possible adverse effects of leniency programs that are too generous. We also examine to what extent a non-exploitable leniency program triggers tacit collusion. The experimental results show that if the efforts of the antitrust authority and the leniency program are directed exclusively to the most straightforward collusive scheme, subjects manage to switch to a more intricate form of coordination. This shift from overt collusion to tacit collusion can serve as the basis for a classroom discussion about the effectiveness of actual leniency programs.

Suggested Citation

  • Jeroen Hinloopen & Adriaan R. Soetevent, 2014. "Exploitation and Induced Tacit Collusion: A Classroom Experiment of Corporate Leniency Programs," World Scientific Book Chapters, in: Martin Peitz & Yossi Spiegel (ed.), THE ANALYSIS OF COMPETITION POLICY AND SECTORAL REGULATION, chapter 8, pages 193-212, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814616362_0008
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    Citations

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    Cited by:

    1. Hinloopen, Jeroen & Onderstal, Sander, 2014. "Going once, going twice, reported! Cartel activity and the effectiveness of antitrust policies in experimental auctions," European Economic Review, Elsevier, vol. 70(C), pages 317-336.
    2. Nick Feltovich & Yasuyo Hamaguchi, 2018. "The Effect of Whistle‐Blowing Incentives on Collusion: An Experimental Study of Leniency Programs," Southern Economic Journal, John Wiley & Sons, vol. 84(4), pages 1024-1049, April.
    3. Noussair, Charles N. & Seres, Gyula, 2020. "The effect of collusion on efficiency in experimental auctions," Games and Economic Behavior, Elsevier, vol. 119(C), pages 267-287.

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