THE EFFECTS OF RINGLEADER DISCRIMINATION ON CARTEL STABILITY AND DETERRENCE EXPERIMENTAL INSIGHTS

Michael Hesch ()
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Michael Hesch: Bundeskartellamt German Federal Cartel Office Germany Karlsruhe Institute of Technology KIT Institute of Economic Theory and Statistics Germany, Postal: DE

Journal of Advanced Research in Law and Economics, 2012, vol. 3, issue 1(5), 26-42

Abstract: Cartel ringleaders make significant contributions to enabling illegal collusive agreements to function According to US legislation ringleaders are excluded from corporate leniency programs Since 2002 under EU regulations ringleaders may qualify for a reduction of fines To date both antitrust laws treat cartel ringleaders differently We analyze the impact of this difference in a cartel experiment Given a low probability of detection through an authority we find that excluding ringleaders from leniency facilitates cartel formation stabilizes collusion and leads to significantly higher market prices The opposite holds for a high probability of detection Here the results are in line with the situation when every player can apply for leniency

Date: 2012
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