Crime and punishment: When tougher antitrust enforcement leads to higher overcharge

Sissel Jensen, Ola Kvaløy, Trond Olsen and Lars Sørgard

No 2013/5, Discussion Papers from Norwegian School of Economics, Department of Business and Management Science

Abstract: The economics of crime and punishment postulates that higher punishment leads to lower crime levels, or less severe crime. It is however hard to get empirical support for this rather intuitive relationship. This paper offers a model that can contribute to explain why this is the case. We show that if criminals can spend resources to reduce the probability of being detected, then a higher general punishment level can increase the crime level. In the context of antitrust enforcement, the model shows that competition authorities who attempt to fight cartels by means of tougher sanctions for all offenders may actually lead cartels to increase their overcharge when leniency programs are in place.

Keywords: Antitrust enforcement; leniency programs; economics of crime (search for similar items in EconPapers)
JEL-codes: K20 K21 L40 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2013-05-27
New Economics Papers: this item is included in nep-com, nep-law and nep-mic
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http://www.nhh.no/Files/Filer/institutter/for/dp/2013/0513.pdf (application/pdf)

Related works:
Working Paper: Crime and punishment: When tougher antitrust enforcement leads to higher overcharge (2013)
Working Paper: Crime and punishment: When tougher antitrust enforcement leads to higher overcharge (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:nhhfms:2013_005

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