Keep to sustain or keep to exploit? Why firms keep hard evidence
AbstractWe develop a model wherein collusive firms' decisions to keep or to destroy the hard evidence is endogenous. Unlike previous literature, we assume that the administration of the cartel crucially depends on the existence of the hard evidence. Within this framework, we explore the impact of a leniency program on whether firms' incentives are to destroy or to keep the hard evidence. Moreover, we examine firms' incentives to report or not to report the hard evidence to the antitrust authority. We show that firms may willfully keep the hard evidence, even if a leniency program is not available, in order to enhance the stability of the cartel. Additionally, we prove that firms are more inclined to keep the hard evidence when a leniency program is available. Finally, we demonstrate that firms are more likely to destroy the hard evidence when the collusive profits-fine ratio increases.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 39109.
Date of creation: 12 Mar 2012
Date of revision:
self-reporting; leniency program; hard evidence; collusion;
Find related papers by JEL classification:
- K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
- L4 - Industrial Organization - - Antitrust Issues and Policies
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-05 (All new papers)
- NEP-BEC-2012-06-05 (Business Economics)
- NEP-LAW-2012-06-05 (Law & Economics)
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