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Heterogeneous Penalties and Private Information

Catarina Marvao ()
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Catarina Marvao: Stockholm Institute of Transition Economics, Postal: Stockholm Institute of Transition Economics, Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden, https://sites.google.com/site/catarinamarvao/

No 29, SITE Working Paper Series from Stockholm School of Economics, Stockholm Institute of Transition Economics

Abstract: The theoretical framework of the adequacy or otherwise of fine reductions under the EU and US Leniency Programmes has been explored widely. However, the characteristics of the reporting cartel members remain unexplained. This is the first paper to develop a model where heterogeneous cartel members have private information on the probability of conviction. It is shown that firms which receive higher fines are more likely to report the cartel. To validate this result and analyze the sources of fine heterogeneity, data for EU and US cartels are used. Being the first reporter is shown to be correlated with recidivism, leadership and other fine reductions. Some characteristics of the cartels where reporting occurred are also unveiled. Identifying the characteristics of the reporting firms is vital to dissolve and dissuade cartels and the wider policy implications of these findings are discussed in the paper.

Keywords: Cartels; competition policy; Leniency Programme; private information; self-reporting (search for similar items in EconPapers)
JEL-codes: D43 K21 K42 L13 L40 L51 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2014-10-06
New Economics Papers: this item is included in nep-com, nep-cta and nep-law
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