Crime and punishment: When tougher antitrust enforcement leads to higher overcharge
AbstractThe economics of crime and punishment postulates that higher punishment leads to lower crime levels, or less severe crime. It is however hard to get empirical support for this rather intuitive relationship. This paper offers a model that can contribute to explain why this is the case. We show that if criminals can spend resources to reduce the probability of being detected, then a higher general punishment level can increase the crime level. In the context of antitrust enforcement, the model shows that competition authorities who attempt to fight cartels by means of tougher sanctions for all offenders may actually lead cartels to increase their overcharge when leniency programs are in place.
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Bibliographic InfoPaper provided by Department of Business and Management Science, Norwegian School of Economics in its series Discussion Papers with number 2013/5.
Length: 33 pages
Date of creation: 27 May 2013
Date of revision:
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Fax: +47 55 95 96 50
Web page: http://www.nhh.no/en/research-faculty/department-of-business-and-management-science.aspx
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Antitrust enforcement; leniency programs; economics of crime;
Other versions of this item:
- Jensen, Sissel & Kvaløy, Ola & Olsen, Trond & Sørgard, Lars, 2013. "Crime and punishment: When tougher antitrust enforcement leads to higher overcharge," UiS Working Papers in Economics and Finance 2013/2, University of Stavanger.
- Jensen, Sissel & Kvaløy, Ola & Olsen, Trond E. & Sorgard, Lars, 2013. "Crime and punishment: When tougher antitrust enforcement leads to higher overcharge," Discussion Paper Series in Economics 4/2013, Department of Economics, Norwegian School of Economics.
- K20 - Law and Economics - - Regulation and Business Law - - - General
- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-20 (All new papers)
- NEP-COM-2013-07-20 (Industrial Competition)
- NEP-LAW-2013-07-20 (Law & Economics)
- NEP-MIC-2013-07-20 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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