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Leniency Policies and Illegal Transactions

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  • Buccirossi, Paolo
  • Spagnolo, Giancarlo

Abstract

We study the consequences of leniency - reduced legal sanctions for wrongdoers who spontaneously self-report to law enforcers - on sequential, bilateral, illegal transactions such as corruption, manager-auditor collusion, or drug deals. It is known that leniency helps to deter illegal relationships sustained by repeated interaction. Here we find that - when not properly designed - leniency may simultaneously provide an effective governance mechanism for occasional sequential illegal transactions that would not be feasible in its absence.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5442.

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Date of creation: Dec 2005
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Handle: RePEc:cpr:ceprdp:5442

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Related research

Keywords: amnesty; collusion; corruption; financial fraud; governance; hold up; hostages; illegal trade; immunity; law enforcement; leniency; organized crime; self-reporting; whistleblowers;

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References

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  1. Malik Arun S., 1993. "Self-Reporting and the Design of Policies for Regulating Stochastic Pollution," Journal of Environmental Economics and Management, Elsevier, vol. 24(3), pages 241-257, May.
  2. Buccirossi, Paolo & Spagnolo, Giancarlo, 2005. "Leniency Policies and Illegal Transactions," CEPR Discussion Papers 5442, C.E.P.R. Discussion Papers.
  3. Innes, Robert, 2000. "Self-Reporting in Optimal Law Enforcement When Violators Have Heterogeneous Probabilities of Apprehension," The Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 287-300, January.
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  9. Spagnolo, Giancarlo, 2006. "Leniency and Whistleblowers in Antitrust," CEPR Discussion Papers 5794, C.E.P.R. Discussion Papers.
  10. Spagnolo, Giancarlo, 2004. "Divide et Impera: Optimal Leniency Programmes," CEPR Discussion Papers 4840, C.E.P.R. Discussion Papers.
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  18. Livernois, John & McKenna, C. J., 1999. "Truth or consequences: Enforcing pollution standards with self-reporting," Journal of Public Economics, Elsevier, vol. 71(3), pages 415-440, March.
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  20. Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-40, September.
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  22. Kaplow, Louis & Shavell, Steven, 1994. "Optimal Law Enforcement with Self-Reporting of Behavior," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 583-606, June.
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Citations

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Cited by:
  1. Graf Lambsdorff, Johann, 2010. "Deterrence and constrained enforcement: Alternative regimes to deal with bribery," Passauer Diskussionspapiere, Volkswirtschaftliche Reihe V-60-10, University of Passau, Faculty of Business and Economics.
  2. Jay Pil Choi & Heiko Gerlach, 2012. "International Antitrust Enforcement And Multimarket Contact," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(2), pages 635-658, 05.
  3. Christoph Engel & Sebastian Goerg & Gaoneng Yu, 2012. "Symmetric vs. Asymmetric Punishment Regimes for Bribery," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2012_01, Max Planck Institute for Research on Collective Goods.
  4. Johann Graf Lambsdorff & Mathias Nell, 2007. "Fighting Corruption with Asymmetric Penalties and Leniency," Center for European, Governance and Economic Development Research Discussion Papers 59, University of Goettingen, Department of Economics.
  5. Buccirossi, Paolo & Spagnolo, Giancarlo, 2005. "Leniency Policies and Illegal Transactions," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 74, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  6. Berentsen, Aleksander & Bruegger, Esther & Loertscher, Simon, 2008. "On cheating, doping and whistleblowing," European Journal of Political Economy, Elsevier, vol. 24(2), pages 415-436, June.
  7. Bj�rn Frank & Johann Graf Lambsdorff & Fr�d�ric Boehm, 2011. "Gender and Corruption: Lessons from Laboratory Corruption Experiments," The European Journal of Development Research, Palgrave Macmillan, vol. 23(1), pages 59-71, February.
  8. Agisilaou, Panayiotis, 2012. "Keep to sustain or keep to exploit? Why firms keep hard evidence," MPRA Paper 39109, University Library of Munich, Germany.
  9. Spagnolo, Giancarlo & Dufwenberg, Martin, 2011. "Legalizing Bribes," SITE Working Paper Series 13, Stockholm Institute of Transition Economics, Stockholm School of Economics, revised 06 Apr 2012.
  10. Paolo Pinotti, 2012. "The economic costs of organized crime: evidence from southern Italy," Temi di discussione (Economic working papers) 868, Bank of Italy, Economic Research and International Relations Area.
  11. Bigoni, Maria & Fridolfsson, Sven-Olof & Le Coq, Chloe & Spagnolo, Giancarlo, 2008. "Fines, Leniency, Rewards and Organized Crime: Evidence from Antitrust Experiments," Working Paper Series in Economics and Finance 698, Stockholm School of Economics.
  12. Lin, Shi-Woei, 2010. "Self-reporting mechanism for risk regulation," Journal of Business Research, Elsevier, vol. 63(5), pages 528-534, May.
  13. Agisilaou, Panayiotis, 2011. "Keep to sustain or keep to exploit? Why firms keep hard evidence," MPRA Paper 30963, University Library of Munich, Germany.
  14. Frédéric Boehm & Johann Graf Lambsdorff, 2009. "Corrupción y anticorrupción: una perspectiva neo-institucional," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 11(21), pages 45-72, July-Dece.

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