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

  • 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)

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.

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Paper provided by Department of Economics, Norwegian School of Economics in its series Discussion Paper Series in Economics with number 4/2013.

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Length: 32 pages
Date of creation: 18 Feb 2013
Date of revision:
Handle: RePEc:hhs:nhheco:2013_004
Contact details of provider: Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Phone: +47 55 959 277
Fax: 5595 9100
Web page: http://www.nhh.no/sam/
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  1. George J. Stigler, 1974. "The Optimum Enforcement of Laws," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 55-67 National Bureau of Economic Research, Inc.
  2. 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.
  3. 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.
  4. Vasiliki Bageri & Yannis Katsoulacos & Giancarlo Spagnolo, 2013. "The Distortive Effects of Antitrust Fines Based on Revenue," Economic Journal, Royal Economic Society, vol. 123(11), pages F545-F557, November.
  5. Joseph E. Harrington, 2008. "OPTIMAL CORPORATE LENIENCY PROGRAMS -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 56(2), pages 215-246, 06.
  6. Arun S. Malik, 1990. "Avoidance, Screening and Optimum Enforcement," RAND Journal of Economics, The RAND Corporation, vol. 21(3), pages 341-353, Autumn.
  7. Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 169.
  8. Mohamed Jellal & Saïd Souam, 2004. "Delegation, Incentives and Antitrust Enforcement," Working Papers 2004-41, Centre de Recherche en Economie et Statistique.
  9. Keith N. Hylton, 1996. "Optimal Law Enforcement and Victim Precaution," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 197-206, Spring.
  10. Langlais, Eric, 2006. "Detection avoidance and deterrence: some paradoxical arithmetics," MPRA Paper 1148, University Library of Munich, Germany, revised 10 Dec 2006.
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