Strategic Leniency and Cartel Enforcement

Nathan H. Miller

American Economic Review, 2009, vol. 99, issue 3, 750-68

Abstract: The cornerstone of cartel enforcement in the United States and elsewhere is a commitment to the lenient prosecution of early confessors. A burgeoning gametheoretical literature is ambiguous regarding the impacts of leniency. I develop a theoretical model of cartel behavior that provides empirical predictions and moment conditions, and apply the model to the complete set of indictments and information reports issued over a 20-year span. Statistical tests are consistent with the notion that leniency enhances deterrence and detection capabilities. The results have implications for market efficiency and enforcement efforts against cartels and other forms of organized crime. (JEL D43, L12, L13, K21)

JEL-codes: D43 K21 L12 L13 (search for similar items in EconPapers)
Date: 2009
Note: DOI: 10.1257/aer.99.3.750
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Citations: View citations in EconPapers (129)

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