Trust and Recidivism; the Partial Success of Corporate Leniency Program in the Laboratory

Jeroen Hinloopen and Adriaan Soetevent

No 06-067/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: An experiment is conducted were subjects interact repeatedly to examine the effect of a particular leniency program on cartel formation, cartel stability and cartel recidivism. The program leads to lower prices for three reasons. First, non-cooperators are more persistent in their behavior which effectively blocks cartel formation in their respective groups. Second, members of groups that do form a cartel defect more often thus reducing the average cartel lifetime. Third, the difference between the agreed-upon price and the undercutting price is larger. The leniency program does not however affect the probability that a dismantled cartel is re-established.

Keywords: cartels; corporate leniency programs; Bertrand competition; experiment (search for similar items in EconPapers)
JEL-codes: C92 D43 L41 (search for similar items in EconPapers)
Date: 2006-08-01
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20060067

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