Effects of Leniency Programs on Cartel Stability
AbstractThis paper studies the effect of leniency programs on the stability of cartels under two different regimes of fines, fixed and proportional.We analyze the design of self-reporting incentives, having a group of defendants.Moreover, we consider a dynamic setup, where accumulated (not instantaneous) benefits and losses from crime are taken into account.We obtain that cartel occurrence is less likely if the rules of the leniency programs are more strict and the procedure of application for leniency is more confidential.Moreover, we conclude that, when the procedure of application for leniency is not confidential and penalties and rate of law enforcement are low, leniency may increase duration of cartel agreements.Surprisingly, under a fixed penalty scheme the introduction of a leniency program cannot improve the effectiveness of antitrust enforcement when the procedure of application for leniency is not confidential.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2004-98.
Date of creation: 2004
Date of revision:
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Web page: http://center.uvt.nl
Other versions of this item:
- NEP-COM-2004-11-07 (Industrial Competition)
- NEP-LAW-2004-11-07 (Law & Economics)
- NEP-REG-2004-11-07 (Regulation)
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