Buccirossi, Paolo () (Lear - Laboratory of Economics, Antitrust and Regulation) Spagnolo, Giancarlo () (Stockholm School of Economics, University of Mannheim and CEPR)
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We study the consequences of 'leniency' - reduced legal sanctions for wrongdoers who spontaneously self-report to law enforcers - on corruption, drug dealing, and other forms of sequential, bilateral, illegal trade. We find that when not properly designed, leniency may be highly counterproductive. In reality leniency is typically "moderate," in the sense of only reducing, or at best cancelling the sanctions for the self-reporting party. Moderate leniency may greatly facilitate the enforcement of long-term illegal trade relations, and may even provide an effective enforcement mechanism for occasional (one-shot) illegal transactions, which would not be enforceable otherwise.
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Length: 31 pages Date of creation: 31 Jul 2001 Date of revision: Handle: RePEc:hhs:hastef:0456
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Find related papers by JEL classification: K00 - Law and Economics - - General - - - General (including Data Sources and Description) K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
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