Leniency Policies and Cartel Success: An Experiment

Jeong Yeol Kim and Charles N. Noussair

No 2022-06, Experimental Economics Center Working Paper Series from Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University

Abstract: Cartels are often fought by granting leniency, in the form of forgiveness of penalties, to whistle-blowers. This study employs a laboratory experiment to compare leniency programs that differ with respect to fine size and whether a second whistle-blower may apply for leniency. The results show that leniency does not affect the probability that a cartel forms, but is effective in exposing cartels and thereby inhibiting cartel success. Higher fines are more effective, but allowing leniency to a second whistle-blower is no more effective than granting leniency to only one whistle-blower.

Keywords: Antitrust; Cartel; Leniency policy; Experiment (search for similar items in EconPapers)
Pages: 30
Date: 2022-12
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Persistent link: https://EconPapers.repec.org/RePEc:exc:wpaper:2022-06

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