The Effects of Leniency on Illegal Transactions: How (Not) to Fight Corruption

Paolo Buccirossi () and Giancarlo Spagnolo
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Paolo Buccirossi: Lear - Laboratory of Economics, Antitrust and Regulation, Postal: Via Belisario 7, 00187 Roma, http://www.lear-sas.it

No 456, SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics

Abstract: We study the consequences of 'leniency' - reduced legal sanctions for wrongdoers who spontaneously self-report to law enforcers - on corruption, drug dealing, and other forms of sequential, bilateral, illegal trade. We find that when not properly designed, leniency may be highly counterproductive. In reality leniency is typically "moderate," in the sense of only reducing, or at best cancelling the sanctions for the self-reporting party. Moderate leniency may greatly facilitate the enforcement of long-term illegal trade relations, and may even provide an effective enforcement mechanism for occasional (one-shot) illegal transactions, which would not be enforceable otherwise.

Keywords: Law enforcement; Self-reporting; Corruption; Crime; Illegal trade; Drug dealing. (search for similar items in EconPapers)
JEL-codes: K00 K21 K42 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2001-07-31
New Economics Papers: this item is included in nep-law and nep-mic
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:hastef:0456

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