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Public and reputational sanctions: The case of cartels

Author

Listed:
  • Franco Mariuzzo

    (Centre for Competition Policy and School of Economics, University of East Anglia)

  • Peter Ormosi

    (Centre for Competition Policy and Norwich Business School, University of East Anglia)

  • Zherou Majied

    (Rayyan Al-Iraq Group, Baghdad, Iraq)

Abstract

In this article, we revive an old debate in the law and economics literature: the relative role of public and reputational sanctions in deterring misconduct. We propose an empirical framework, which accounts for public sanctions and a more direct measure of reputational sanctions, harnessing recent developments in opinion mining. We use the intensity and the sentiment of media exposure of misconduct as a measure of reputational effect and thus approximation of the reputational sanction. As a demonstration, we combine an event study approach, sentiment analysis, and econometric techniques on a sample of 339 listed cartel member firms, prosecuted by the European Commission between 1992 and 2015. Our results offer evidence that in the context of cartels, public and reputational sanctions act as substitutes.

Suggested Citation

  • Franco Mariuzzo & Peter Ormosi & Zherou Majied, 2019. "Public and reputational sanctions: The case of cartels," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2018-06v3, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    • Handle: RePEc:uea:ueaccp:2018_06v3
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    References listed on IDEAS

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    More about this item

    Keywords

    Cartels; event study; public sanctions; reputational sanctions; sentiment analysis;
    All these keywords.

    JEL classification:

    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

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