On the Design of Leniency Programs
Leniency programs contribute to destabilizing collusion but can also be abused and generate perverse effects. This paper develops a simple model capturing this trade-off, which we use to relate the optimal leniency policy (the carrot) to the effectiveness of investigations (the stick). We show that it is always desirable to offer some leniency before an investigation is launched; it is also optimal to offer some leniency once an investigation is underway when investigations are unlikely to succeed in uncovering cartels, absent self-reporting. Our analysis also confirms the usefulness of restricting leniency to the first informant only; in contrast, it does not support prohibiting leniency for repeat offenders.
(This abstract was borrowed from another version of this item.)
|Date of creation:||Apr 2007|
|Date of revision:||Jan 2012|
|Publication status:||Published in The Journal of Law and Economics, vol. 56, n°4, novembre 2013, p. 917-957.|
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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.:
- Massimo Motta & Michele Polo, .
"Leniency Programs and Cartel Prosecution,"
150, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- 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-00278558, HAL.
- Cécile Aubert & Patrick Rey & William Kovacic, 2006. "The Impact of Leniency and Whistle-blowing Programs on Cartels," Post-Print hal-00151654, HAL.
- Frezal, Sylvestre, 2006. "On optimal cartel deterrence policies," International Journal of Industrial Organization, Elsevier, vol. 24(6), pages 1231-1240, November.
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