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Leniency Policies and Cartel Success: An Experiment

Author

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  • Jeong Yeol Kim

    (KDI School of Public Policy and Management)

  • Charles N. Noussair

    (University of Arizona)

Abstract

Cartels are often fought by granting leniency, in the form of forgiveness of penalties, to whistle-blowers. This study employs a laboratory experiment to compare leniency programs that differ with respect to fine size and whether a second whistle-blower may apply for leniency. The results show that leniency does not affect the probability that a cartel forms, but is effective in exposing cartels and thereby inhibiting cartel success. Higher fines are more effective, but allowing leniency to a second whistle-blower is no more effective than granting leniency to only one whistle-blower.

Suggested Citation

  • Jeong Yeol Kim & Charles N. Noussair, 2023. "Leniency Policies and Cartel Success: An Experiment," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 63(2), pages 187-210, September.
    • Handle: RePEc:kap:revind:v:63:y:2023:i:2:d:10.1007_s11151-023-09915-z
    DOI: 10.1007/s11151-023-09915-z
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    References listed on IDEAS

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