Fines, Leniency and Rewards in Antitrust: an Experiment

Giancarlo Spagnolo, Sven-Olof Fridolfsson, Chloe Le Coq and Maria Bigoni

No 7417, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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; Competition policy; Coordination; Corporate crime; Desistance; Deterrence; Law enforcement; Organized crime; Price-fixing (search for similar items in EconPapers)
JEL-codes: C73 C92 K21 L41 (search for similar items in EconPapers)
Date: 2009-08
New Economics Papers: this item is included in nep-com, nep-exp and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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