Exploitation and Induced Tacit Collusion: A Classroom Experiment of Corporate Leniency Programs

Jeroen Hinloopen and Adriaan Soetevent

Chapter 8 in The Analysis of Competition Policy and Sectoral Regulation, 2014, pp 193-212 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Recent laboratory experiments support the popular view that the introduction of corporate leniency programs has significantly decreased cartel activity. We develop a classroom experiment that captures key features of leniency programs. Our treatments include an exploitable and a non-exploitable leniency program to highlight possible adverse effects of leniency programs that are too generous. We also examine to what extent a non-exploitable leniency program triggers tacit collusion. The experimental results show that if the efforts of the antitrust authority and the leniency program are directed exclusively to the most straightforward collusive scheme, subjects manage to switch to a more intricate form of coordination. This shift from overt collusion to tacit collusion can serve as the basis for a classroom discussion about the effectiveness of actual leniency programs.

Keywords: Competition Policy; Sectoral Regulation; Pattern Asymmetry; Market Consolidation; Grocery Retailing; Pricing Developments; Industry Structure; Price Effects of Mergers; Input Price Shocks; Quantity Discounts (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (3)

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