Fines, Leniency and Rewards in Antitrust: an Experiment
This paper reports results from an experiment studying how fines, leniency programs and reward schemes for whistleblowers affect cartel formation and prices. Antitrust without leniency reduces cartel formation, but increases cartel prices: subjects use costly fines as (altruistic) punishments. Leniency further increases deterrence, but stabilizes surviving cartels: subjects appear to anticipate harsher times after defections as leniency reduces recidivism and lowers post-conviction prices. With rewards, cartels are reported systematically and prices finally fall. If a ringleader is excluded from leniency, deterrence is unaffected but prices grow. Differences between treatments in Stockholm and Rome suggest culture may affect optimal law enforcement.
|Date of creation:||Aug 2009|
|Contact details of provider:|| Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.|
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nathan H. Miller, 2009. "Strategic Leniency and Cartel Enforcement," American Economic Review, American Economic Association, vol. 99(3), pages 750-768, June.
- Motta, Massimo & Polo, Michele, 2003.
"Leniency programs and cartel prosecution,"
International Journal of Industrial Organization,
Elsevier, vol. 21(3), pages 347-379, March.
- Massimo Motta & Michele Polo, "undated". "Leniency Programs and Cartel Prosecution," Working Papers 150, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Motta, Massimo & Polo, Michele, 2000. "Leniency Programs and Cartel Prosecution," CEPR Discussion Papers 2349, C.E.P.R. Discussion Papers.
- Motta, M. & Polo, M., 1999. "Leniency Programs and Cartel Prosecution," Economics Working Papers eco99/23, European University Institute.
- Fudenberg, Drew & Dreber, Anna & Rand, David G. & Nowak, Martin, 2008. "Winners Don't Punish," Scholarly Articles 2252594, Harvard University Department of Economics.
- Andersson, Ola & Holm, Håkan J., 2010.
"Endogenous communication and tacit coordination in market entry games: An explorative experimental study,"
International Journal of Industrial Organization,
Elsevier, vol. 28(5), pages 477-495, September.
- Andersson, Ola & Carlsson, Hans & Holm, Håkan, 2006. "Endogenous Communication and Tacit Coordination in Market Entry Games - An explorative experimental study," Working Papers 2006:12, Lund University, Department of Economics.
- Roth, Alvin E. & Vesna Prasnikar & Masahiro Okuno-Fujiwara & Shmuel Zamir, 1991.
"Bargaining and Market Behavior in Jerusalem, Ljubljana, Pittsburgh, and Tokyo: An Experimental Study,"
American Economic Review,
American Economic Association, vol. 81(5), pages 1068-1095, December.
- Alvin E. Roth & V. Prasnikar & M. Okuno-Fujiwara & S. Zamir, 1998. "Bargaining and market behavior in Jerusalem, Liubljana, Pittsburgh and Tokyo: an experimental study," Levine's Working Paper Archive 344, David K. Levine.
- Jeroen Hinloopen & Adriaan R. Soetevent, 2008. "Laboratory evidence on the effectiveness of corporate leniency programs," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 607-616.
- Ola Andersson & Erik Wengström, 2007.
"Do Antitrust Laws Facilitate Collusion? Experimental Evidence on Costly Communication in Duopolies,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 109(2), pages 321-339, 06.
- Andersson, Ola & Wengström, Erik, 2004. "Do Antitrust Laws Facilitate Collusion? Experimental Evidence on Costly Communication in Duopolies," Working Papers 2004:14, Lund University, Department of Economics, revised 13 Sep 2004.
- R. Preston Mcafee & Hugo M. Mialon & Sue H. Mialon, 2010. "Do Sunk Costs Matter?," Economic Inquiry, Western Economic Association International, vol. 48(2), pages 323-336, 04.
- Jose Apesteguia & Martin Dufwenberg & Reinhard Selten, 2007.
"Blowing the Whistle,"
Springer;Society for the Advancement of Economic Theory (SAET), vol. 31(1), pages 143-166, April.
- José Apesteguía & Martin Dufwenberg & Reinhard Selten, 2003. "Blowing the Whistle," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 0303, Departamento de Economía - Universidad Pública de Navarra, revised 2003.
- Apesteguia, Jose & Dufwenberg, Martin & Selten, Reinhard, 2003. "Blowing the Whistle," Research Papers in Economics 2003:5, Stockholm University, Department of Economics.
- José Apesteguia & Martin Dufwenberg & Reinhard Selten, 2003. "Blowing the Whistle," Bonn Econ Discussion Papers bgse9_2003, University of Bonn, Germany.
- Crawford, Vincent, 1998. "A Survey of Experiments on Communication via Cheap Talk," Journal of Economic Theory, Elsevier, vol. 78(2), pages 286-298, February.
- Gérard P. Cachon & Colin F. Camerer, 1996. "Loss-Avoidance and Forward Induction in Experimental Coordination Games," The Quarterly Journal of Economics, Oxford University Press, vol. 111(1), pages 165-194.
- Michael F. Sproul, 2009.
"Antitrust and Prices,"
Russian Presidential Academy of National Economy and Public Administration, vol. 2, pages 84-95, April.
- Ernst Fehr & Simon Gaechter, 1999.
"Cooperation and Punishment in Public Goods Experiments,"
CESifo Working Paper Series
183, CESifo Group Munich.
- Simon Gachter & Ernst Fehr, 2000. "Cooperation and Punishment in Public Goods Experiments," American Economic Review, American Economic Association, vol. 90(4), pages 980-994, September.
- Ernst Fehr & Simon Gaechter, "undated". "Cooperation and Punishment in Public Goods Experiments," IEW - Working Papers 010, Institute for Empirical Research in Economics - University of Zurich.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
- Cécile Aubert, 2005.
"The Impact of Leniency and Whistle-blowing Programs on Cartels,"
- Aubert, Cecile & Rey, Patrick & Kovacic, William E., 2006. "The impact of leniency and whistle-blowing programs on cartels," International Journal of Industrial Organization, Elsevier, vol. 24(6), pages 1241-1266, November.
- Cécile Aubert, 2005. "The Impact of Leniency and Whistle-blowing Programs on Cartels," Post-Print hal-00278581, HAL.
- Cécile Aubert & Patrick Rey & William Kovacic, 2006. "The Impact of Leniency and Whistle-blowing Programs on Cartels," Post-Print hal-00151654, HAL.
- Dirk Engelmann & Hans-Theo Normann, 2010. "Maximum effort in the minimum-effort game," Experimental Economics, Springer;Economic Science Association, vol. 13(3), pages 249-259, September.
- Bigoni, Maria & Le Coq, Chloé & Fridolfsson, Sven-Olof & Spagnolo, Giancarlo, 2008. "Risk Aversion, Prospect Theory, and Strategic Risk in Law Enforcement: Evidence From an Antitrust Experiment," SSE/EFI Working Paper Series in Economics and Finance 696, Stockholm School of Economics.
- Elias L. Khalil (ed.), 2003. "Trust," Books, Edward Elgar Publishing, number 2482.
- Hamaguchi, Yasuyo & Kawagoe, Toshiji & Shibata, Aiko, 2009. "Group size effects on cartel formation and the enforcement power of leniency programs," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 145-165, March.
- Jana Krajcova & Andreas Ortmann, 2008. "Testing Leniency Programs Experimentally: The Impact of “Natural” Framing," CERGE-EI Working Papers wp372, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
- Joseph E. Harrington, Jr, 2005. "Optimal Corporate Leniency Programs," Economics Working Paper Archive 527, The Johns Hopkins University,Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:7417. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.