Crime and punishment: When tougher antitrust enforcement leads to higher overcharge

Sissel Jensen, Ola Kvaløy, Trond Olsen and Lars Sørgard

No 2013/2, UiS Working Papers in Economics and Finance from University of Stavanger

Abstract: The economics of crime and punishment postulates that higher punishment leads to lower crime levels, or less severe crime. It is how- ever hard to get empirical support for this rather intuitive relationship. This paper offers a model that can contribute to explain why this is the case. We show that if criminals can spend resources to reduce the probability of being detected, then a higher general punishment level can increase the crime level. In the context of antitrust enforcement, the model shows that competition authorities who attempt to fight cartels by means of tougher sanctions for all offenders may actually lead cartels to increase their overcharge when leniency programs are in place.

Keywords: Antitrust Enforcement; Leniency; Economics of Crime (search for similar items in EconPapers)
JEL-codes: A10 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2013-03-06
New Economics Papers: this item is included in nep-com
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Working Paper: Crime and punishment: When tougher antitrust enforcement leads to higher overcharge (2013)
Working Paper: Crime and punishment: When tougher antitrust enforcement leads to higher overcharge (2013)
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