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Corporate Leniency with Private Information: The Push of Prosecution and the Pull of Pre-emption

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  • Joseph E. Harrington, Jr.

Abstract

A corporate leniency program provides relief from government penalties to the first member of a cartel to come forward and cooperate with the authorities. This study explores the incentives to apply for leniency when each cartel member has private information as to the likelihood that the competition authority will be able to convict them without a cooperating firm. A firm may apply for leniency because it fears being convicted ("prosecution effect") or because it fears another firm will apply ("pre-emption effect"). Policies by the competition authority to magnify concerns about pre-emption - and thereby induce greater use of the leniency program - are also explored.

Suggested Citation

  • Joseph E. Harrington, Jr., 2011. "Corporate Leniency with Private Information: The Push of Prosecution and the Pull of Pre-emption," Economics Working Paper Archive 573, The Johns Hopkins University,Department of Economics.
    • Handle: RePEc:jhu:papers:573
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    References listed on IDEAS

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    1. Motta, Massimo & Polo, Michele, 2003. "Leniency programs and cartel prosecution," International Journal of Industrial Organization, Elsevier, vol. 21(3), pages 347-379, March.
    2. Joseph E. Harrington, Jr, 2005. "Optimal Corporate Leniency Programs," Economics Working Paper Archive 527, The Johns Hopkins University,Department of Economics.
    3. Joseph E. Harrington, Jr, 2006. "Modelling the Birth and Death of Cartels with an Application to Evaluating Antitrust Policy," Economics Working Paper Archive 532, The Johns Hopkins University,Department of Economics.
    4. Maria Bigoni & Sven-Olof Fridolfsson & Chloé Le Coq & Giancarlo Spagnolo, 2015. "Trust, Leniency, and Deterrence," Journal of Law, Economics, and Organization, Oxford University Press, vol. 31(4), pages 663-689.
    5. A. Pinna, 2010. "Optimal Leniency Programs in Antitrust," Working Paper CRENoS 201018, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    6. Joseph E. Harrington & Myong-Hun Chang, 2009. "Modeling the Birth and Death of Cartels with an Application to Evaluating Competition Policy," Journal of the European Economic Association, MIT Press, vol. 7(6), pages 1400-1435, December.
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