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Ringleader Discrimination in Leniency Policies

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  • Konstantinos Charistos

    (University of Macedonia
    University of Crete)

Abstract

This paper studies whether excluding the cartel ringleader from “leniency programs” (LPs) hinders collusion. The ringleader’s exclusion from any leniency right: (a) destabilizes cartels by creating asymmetry in the partners’ collusive payoffs; and (b) fosters cartel activity by reducing the ringleader’s payoff from deviation. The discriminatory LP can increase the ringleader’s credibility as loyal partner and weaken firms’ incentive to deviate. A partially discriminatory LP that allows the ringleader to receive leniency only when it denounces a cartel that is not under investigation but not when cooperating in an already launched investigation eliminates (b). By restoring the ringleader’s payoff from deviation at its non-discriminatory level, partial discrimination is more effective in destabilizing collusion compared to both, full- and non-discrimination.

Suggested Citation

  • Konstantinos Charistos, 2022. "Ringleader Discrimination in Leniency Policies," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 61(3), pages 297-315, November.
    • Handle: RePEc:kap:revind:v:61:y:2022:i:3:d:10.1007_s11151-022-09875-w
    DOI: 10.1007/s11151-022-09875-w
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    References listed on IDEAS

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    1. Zhijun Chen & Patrick Rey, 2013. "On the Design of Leniency Programs," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 917-957.
    2. Georg Clemens & Holger A. Rau, 2019. "Do discriminatory leniency policies fight hard‐core cartels?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(2), pages 336-354, April.
    3. Motta, Massimo & Polo, Michele, 2003. "Leniency programs and cartel prosecution," International Journal of Industrial Organization, Elsevier, vol. 21(3), pages 347-379, March.
    4. 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.
    5. Katsoulacos, Yannis & Motchenkova, Evgenia & Ulph, David, 2015. "Penalizing cartels: The case for basing penalties on price overcharge," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 70-80.
    6. Joseph E. Harrington, 2008. "Optimal Corporate Leniency Programs," Journal of Industrial Economics, Wiley Blackwell, vol. 56(2), pages 215-246, June.
    7. Spagnolo, Giancarlo, 2004. "Divide et Impera: Optimal Leniency Programmes," CEPR Discussion Papers 4840, C.E.P.R. Discussion Papers.
    8. Chen, Zhiqi & Ghosh, Subhadip & Ross, Thomas W., 2015. "Denying leniency to cartel instigators: Costs and benefits," International Journal of Industrial Organization, Elsevier, vol. 41(C), pages 19-29.
    9. Harrington, Joseph E., 2014. "Penalties and the deterrence of unlawful collusion," Economics Letters, Elsevier, vol. 124(1), pages 33-36.
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    Cited by:

    1. Isogai, Shigeki & Shen, Chaohai, 2023. "Multiproduct firm’s reputation and leniency program in multimarket collusion," Economic Modelling, Elsevier, vol. 125(C).

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    More about this item

    Keywords

    Antitrust enforcement; Collusion; Leniency programs; Ringleader discrimination;
    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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