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Effects of Leniency Programs on Cartel Stability

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  • Motchenkova, E.

    (Tilburg University, Tilburg Law and Economics Center)

Abstract

This 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.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Paper provided by Tilburg University, Tilburg Law and Economic Center in its series Discussion Paper with number 2004-020.

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Date of creation: 2004
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Handle: RePEc:dgr:kubtil:2004020

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Web page: http://www.tilburguniversity.nl/tilec/

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References

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  1. José Apesteguía & Martin Dufwenberg & Reinhard Selten, 2003. "Blowing the Whistle," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 0303, Departamento de Economía - Universidad Pública de Navarra, revised 2003.
  2. Motta, M. & Polo, M., 1999. "Leniency Programs and Cartel Prosecution," Economics Working Papers eco99/23, European University Institute.
  3. Reinganum, Jennifer F, 1981. "On the Diffusion of New Technology: A Game Theoretic Approach," Review of Economic Studies, Wiley Blackwell, vol. 48(3), pages 395-405, July.
  4. Garoupa, Nuno, 1997. " The Theory of Optimal Law Enforcement," Journal of Economic Surveys, Wiley Blackwell, vol. 11(3), pages 267-95, September.
  5. Louis Kaplow & Steven Shavell, 1991. "Optimal Law Enforcement with Self-Reporting of Behavior," NBER Working Papers 3822, National Bureau of Economic Research, Inc.
  6. Nuno Garoupa, 2000. "Optimal magnitude and probability of fines," Economics Working Papers 454, Department of Economics and Business, Universitat Pompeu Fabra.
  7. Motchenkova, E. & Kort, P.M., 2004. "Analysis of the Properties of Current Penalty Schemes for Violations of Antitrust Law," Discussion Paper 2004-97, Tilburg University, Center for Economic Research.
  8. Fudenberg, Drew & Tirole, Jean, 1985. "Preemption and Rent Equilization in the Adoption of New Technology," Review of Economic Studies, Wiley Blackwell, vol. 52(3), pages 383-401, July.
  9. Innes, Robert, 1999. "Remediation and self-reporting in optimal law enforcement," Journal of Public Economics, Elsevier, vol. 72(3), pages 379-393, June.
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Citations

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Cited by:
  1. Tim Reuter, 2012. "Private antitrust enforcement revisited: The role of private incentives to report evidence to the antitrust authority," Working Paper Series of the Department of Economics, University of Konstanz 2012-04, Department of Economics, University of Konstanz.
  2. Houba, H.E.D. & Motchenkova, E. & Wen, Q., 2008. "Maximal Cartel Pricing and Leniency Programs," Discussion Paper 2008-046, Tilburg University, Tilburg Law and Economic Center.
  3. Agisilaou, Panayiotis, 2011. "Keep to sustain or keep to exploit? Why firms keep hard evidence," MPRA Paper 30963, University Library of Munich, Germany.
  4. Alfredo Burlando & Alberto Motta, 2007. "Self Reporting reduces corruption in law enforcement," "Marco Fanno" Working Papers 0063, Dipartimento di Scienze Economiche "Marco Fanno".
  5. Agisilaou, Panayiotis, 2012. "Keep to sustain or keep to exploit? Why firms keep hard evidence," MPRA Paper 39109, University Library of Munich, Germany.
  6. Bochet,Olivier, 2005. "Implementation of the Walrasian Correspondence: The Boundary Problem," Research Memorandum 037, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  7. Sánchez Navarro, Dennis, 2013. "Eficacia y asimetrías de los programas de delación en un contexto multi-mercado: un análisis del caso colombiano en el marco del TLC con Estados Unidos
    [Efficacy and asymmetries of the leniency
    ," MPRA Paper 48699, University Library of Munich, Germany.
  8. Leliefeld, D. & Motchenkova, E., 2007. "To Protect in Order to Serve: Adverse Effects of Leniency Programs in View of Industry Asymmetry," Discussion Paper 2007-007, Tilburg University, Tilburg Law and Economic Center.
  9. Feess,Eberhard & Walzl,Markus, 2005. "Quid-Pro-Quo or Winner-Takes-It-All? An Analysis of Corporate Leniency Programs and Lessons to Learn for EU and US Policies," Research Memorandum 039, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  10. Dennis Sánchez Navarro, 2013. "Eficacia y asimetrías de los programas de delación en un contexto multimercado: un análisis del caso colombiano en el marco del TLC con Estados Unidos," ESTUDIOS ECONÓMICOS SIC 010905, SUPERINTENDENCIA DE INDUSTRIA Y COMERCIO.
  11. Gyuzel Yusupova, 2013. "Leniency program and cartel deterrence in Russia: effects assessment," HSE Working papers WP BRP 06/PA/2013, National Research University Higher School of Economics.
  12. Patrice Bougette & Christian Montet & Florent Venayre, 2006. "L'efficacité économique des programmes de clémence," Post-Print halshs-00476807, HAL.
  13. Evgenia Motchenkova & Rob Laan, 2011. "Strictness of leniency programs and asymmetric punishment effect," International Review of Economics, Springer, vol. 58(4), pages 401-431, December.

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