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On leniency and markers in antitrust: how many informants are enough?

Author

Listed:
  • Konstantinos Charistos

    (Department of Economics, University of Macedonia)

  • Christos Constantatos

    (Department of Economics, University of Macedonia)

Abstract

In this paper we investigate the impact of leniency programs on firms’ decision to collude. We depart from previous literature by relaxing the assumption that evidence provided by a single firm suffices to convict an existing cartel with certainty. Assuming the conviction-probability to be increasing in the number of reporting firms, we show first that efficient cartel deterrence requires incentives for all firms to report. Under a regime that secures a marker for the first in line applicant, eligibility for leniency should be extended to at least a second informant. Further, we show that the introduction of the marker system has an ambiguous impact on cartel deterrence. In relation to the manner that the marker is secured and the cartel-related evidence is allocated, we derive the conditions under which allowing the first applicant to secure a marker enhances cartel deterrence.

Suggested Citation

  • Konstantinos Charistos & Christos Constantatos, 2016. "On leniency and markers in antitrust: how many informants are enough?," Discussion Paper Series 2016_02, Department of Economics, University of Macedonia, revised Nov 2016.
    • Handle: RePEc:mcd:mcddps:2016_02
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    File URL: http://aphrodite.uom.gr/econwp/pdf/dp022016.pdf
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    Cited by:

    1. Marc Blatter & Winand Emons & Silvio Sticher, 2018. "Optimal Leniency Programs When Firms Have Cumulative and Asymmetric Evidence," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 52(3), pages 403-427, May.

    More about this item

    Keywords

    antitrust enforcement; collusion; leniency programs.;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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