Trust, Leniency, and Deterrence
TLDR
In this paper, the authors present results from a laboratory experiment studying the channels through which different law enforcement strategies deter cartel formation, showing that the main determinant of deterrence is the fear of partners deviating and reporting.Abstract:
This article presents results from a laboratory experiment studying the channels through which different law enforcement strategies deter cartel formation. With leniency policies offering immunity to the first reporting party, a high fine is the main determinant of deterrence, having a strong effect even when the probability of exogenous detection is zero. Deterrence appears to be mainly driven by "distrust"; here, the fear of partners deviating and reporting. Absent leniency, the probability of detection and the expected fine matter more, and low fines are exploited to punish defections. The results appear relevant to several other forms of crimes that share cartels’ strategic features, including corruption and financial fraud. (JEL C92, D03, K21, K42, L41.)read more
Citations
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Key determinants of airline pricing and air travel demand in China and India: Policy, ownership, and LCC competition
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Corporate Leniency Programs when Firms have Private Information: The Push of Prosecution and the Pull of Pre‐emption
TL;DR: In this paper, the authors explore 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.
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Asymmetric Punishment as an Instrument of Corruption Control
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Leniency Programs and the Design of Antitrust: Experimental Evidence with Free-Form Communication
TL;DR: In this article, the authors present experimental evidence on the effectiveness of corporate leniency programs, which allows subjects to have free-form communication, and they do not find much of an effect of such programs.
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The Effect of Whistle‐Blowing Incentives on Collusion: An Experimental Study of Leniency Programs
Nick Feltovich,Yasuyo Hamaguchi +1 more
TL;DR: In this paper, the authors theoretically and experimentally investigate one version of whistle-blowing incentive: leniency programs aimed at curbing anticompetitive activities by firms, by reducing the punishment faced by a cartel member who reports the cartel's behavior.
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