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Crime and punishment: When tougher antitrust enforcement leads to higher overcharge

Author

Listed:
  • Jensen, Sissel

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Kvaløy, Ola

    (University of Stavanger)

  • Olsen, Trond E.

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Sorgard, Lars

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

Abstract

The economics of crime and punishment postulates that higher punishment leads to lower crime levels, or less severe crime. It is however hard to get empirical support for this intuitive relationship. This paper o¤ers a model that contributes to explain why this is the case. We show that if criminals can spend resources to reduce the probability of being detected, then a higher general punishment level can increase the crime level. In the context of antitrust enforcement, it is shown that competition authorities who attempt to …ght cartels by means of tougher sanctions for all o¤enders may actually lead cartels to increase their overcharge when leniency programs are in place.

Suggested Citation

  • Jensen, Sissel & Kvaløy, Ola & Olsen, Trond E. & Sorgard, Lars, 2013. "Crime and punishment: When tougher antitrust enforcement leads to higher overcharge," Discussion Paper Series in Economics 4/2013, Norwegian School of Economics, Department of Economics.
    • Handle: RePEc:hhs:nhheco:2013_004
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    References listed on IDEAS

    as
    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    antitrust enforcement; leniency programs; economics of crime.;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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