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Prosecution and Leniency Programs: a Fool's Game

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  • Sauvagnat, Julien

Abstract

We present a model where the Antitrust Authority is privately informed about the strength of the case against a given cartel. In this context, the Antitrust Authority may obtain cartel members' confessions even when it opens an investigation knowing that it has no chance to find hard evidence. More generally, we show that offering leniency allows to raise the conviction rate, which in turn enhances cartel desistance and cartel deterrence. A second contribution of the paper is to show that the optimal leniency scheme involves a single informant rule. That is, amnesty should be given only if a unique cartel member reports information.

Suggested Citation

  • Sauvagnat, Julien, 2010. "Prosecution and Leniency Programs: a Fool's Game," TSE Working Papers 10-188, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:23201
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    References listed on IDEAS

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    21. Jeroen Hinloopen & Adriaan R. Soetevent, 2008. "Laboratory evidence on the effectiveness of corporate leniency programs," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 607-616, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Emilie Dargaud & Armel Jacques, 2015. "Endogenous firms’ organization, internal audit and leniency programs," Working Papers 1524, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    2. Marc Blatter & Winand Emons & Silvio Sticher, 2018. "Optimal Leniency Programs When Firms Have Cumulative and Asymmetric Evidence," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 52(3), pages 403-427, May.
    3. Joseph E. Harrington, 2012. "Corporate Leniency with Private Information: An Exploratory Example," Chapters, in: Joseph E. Harrington Jr & Yannis Katsoulacos (ed.), Recent Advances in the Analysis of Competition Policy and Regulation, chapter 2, Edward Elgar Publishing.
    4. Salvatore Piccolo & Giovanni Immordino, 2012. "Optimal Accomplice-Witnesses Regulation under Asymmetric Information," CSEF Working Papers 304, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    5. Julien Sauvagnat, 2015. "Prosecution and Leniency Programs: The Role of Bluffing in Opening Investigations," Journal of Industrial Economics, Wiley Blackwell, vol. 63(2), pages 313-338, June.
    6. 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.
    7. Tim Reuter, 2012. "Private antitrust enforcement revisited: The role of private incentives to report evidence to the antitrust authority," Working Paper Series of the Department of Economics, University of Konstanz 2012-04, Department of Economics, University of Konstanz.
    8. Sauvagnat, Julien, 2014. "Are leniency programs too generous?," Economics Letters, Elsevier, vol. 123(3), pages 323-326.

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    More about this item

    Keywords

    Antitrust law and policy; Cartels; Collusion; Self-reporting;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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