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Keep to sustain or keep to exploit? Why firms keep hard evidence

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  • Agisilaou, Panayiotis

Abstract

We 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.

Suggested Citation

  • Agisilaou, Panayiotis, 2012. "Keep to sustain or keep to exploit? Why firms keep hard evidence," MPRA Paper 39109, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:39109
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    References listed on IDEAS

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    6. Motchenkova, E., 2004. "Effects of Leniency Programs on Cartel Stability," Other publications TiSEM d6321c1e-b79a-4aae-8ef5-d, Tilburg University, School of Economics and Management.
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    10. Joseph E. Harrington, 2008. "Optimal Corporate Leniency Programs," Journal of Industrial Economics, Wiley Blackwell, vol. 56(2), pages 215-246, June.
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    Cited by:

    1. Ruben Korsten & Andrew Samuel, 2023. "Cartel formation and detection: the role of information costs and disclosure," European Journal of Law and Economics, Springer, vol. 56(1), pages 117-153, August.
    2. 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.

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    More about this item

    Keywords

    self-reporting; leniency program; hard evidence; collusion;
    All these keywords.

    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

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