The effectiveness of leniency programs when firms choose the degree of collusion

Winand Emons

International Journal of Industrial Organization, 2020, vol. 70, issue C

Abstract: An antitrust authority grants leniency pre- and post-investigation. It chooses the probability of an investigation. Firms pick the degree of collusion: The more they collude, the higher are profits, but so is the probability of detection. Firms thus trade-off higher profits against higher expected fines. If firms are sufficiently patient, leniency is ineffective; it may even increase collusion. Increasing the probability of an investigation at low levels does not increase deterrence. Increasing the probability of an investigation at high levels reduces collusion, yet never completely. With bare pre-investigation leniency, deterrence is better than without leniency. If firms are sufficiently impatient, granting leniency pre- and post- is better than merely pre-investigation.

Keywords: Antitrust; Cartels; Deterrence; Leniency (search for similar items in EconPapers)
JEL-codes: D43 K21 K42 L40 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Working Paper: The Effectiveness of Leniency Programs when Firms choose the Degree of Collusion (2018)
Working Paper: The Effectiveness of Leniency Programs when Firms choose the Degree of Collusion (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:70:y:2020:i:c:s0167718720300424

DOI: 10.1016/j.ijindorg.2020.102619

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