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Leniency Policies and Cartel Success: An Experiment

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  • Jeong Yeol Kim
  • Charles N. Noussair

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, 2022. "Leniency Policies and Cartel Success: An Experiment," Experimental Economics Center Working Paper Series 2022-06, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:exc:wpaper:2022-06
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    References listed on IDEAS

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