Fines, Leniency and Rewards in Antitrust: An Experiment

Maria Bigoni, Fridolfsson, Sven-Olof (), Chloé Le Coq () and Giancarlo Spagnolo
Additional contact information
Fridolfsson, Sven-Olof: Research Institute of Industrial Economics (IFN), Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden, http://www.ifn.se/SOF
Chloé Le Coq: Stockholm Institute of Transition Economies, Postal: Stockholm School of Economics

No 738, Working Paper Series from Research Institute of Industrial Economics

Abstract: This paper reports results from an experiment studying how fines, leniency programs and reward schemes for whistleblowers affect cartel formation and prices. Antitrust without leniency reduces cartel formation, but increases cartel prices: subjects use costly fines as (altruistic) punishments. Leniency further increases deterrence, but stabilizes surviving cartels: subjects appear to anticipate harsher times after defections as leniency reduces recidivism and lowers post-conviction prices. With rewards, cartels are reported systematically and prices finally fall. If a ringleader is excluded from leniency, deterrence is unaffected but prices grow. Differences between treatments in Stockholm and Rome suggest culture may affect optimal law enforcement.

Keywords: Cartels; Collusion; Coordination; Competition policy; Deterrence; Desistance; Law enforcement; Price-fixing; Punishment; Recidivism; Whistleblowers (search for similar items in EconPapers)
JEL-codes: C73 C92 L41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-cta, nep-exp, nep-law and nep-reg
Date: 2008-04-24, Revised 2009-08-06
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Working Paper: Fines, Leniency and Rewards in Antitrust: an Experiment (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:hhs:iuiwop:0738

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