Leniency Policies and Illegal Transactions

Paolo Buccirossi and Giancarlo Spagnolo

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: Forthcoming in the Journal of Public Economics. We study the consequences of leniency – reduced legal sanctions for wrongdoers who spontaneously self-report to law enforcers – on sequential, bilateral, illegal transactions, such as corruption, manager-auditor collusion, or drug deals. It is known that leniency helps deterring illegal relationships sustained by repeated interaction. Here we find that - when not properly designed - leniency may simultaneously provide an effective governance mechanism for occasional sequential illegal transactions that would not be feasible in its absence.

Keywords: amnesty; corruption; collusion; financial fraud; governance; hold up; hostages; illegal trade; immunity; law enforcement; leniency; organized crime; self-reporting; whistleblowers (search for similar items in EconPapers)
JEL-codes: K21 K42 (search for similar items in EconPapers)
Date: 2005-09
New Economics Papers: this item is included in nep-com, nep-law and nep-reg
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Leniency policies and illegal transactions (2006)
Working Paper: Leniency Policies and Illegal Transactions (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:trf:wpaper:74

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