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Keep to sustain or keep to exploit? Why firms keep hard evidence

Panayiotis Agisilaou

MPRA Paper from University Library of Munich, Germany

Abstract: We develop a model wherein collusive firms' decisions to keep or to destroy the hard evidence is endogenous. Unlike previous literature, we assume that the administration of the cartel crucially depends on the existence of the hard evidence. Within this framework, we explore the impact of a leniency program on whether firms' incentives are to destroy or to keep the hard evidence. Moreover, we examine firms' incentives to report or not to report the hard evidence to the antitrust authority. We show that firms may willfully keep the hard evidence, even if a leniency program is not available, in order to enhance the stability of the cartel. Additionally, we prove that firms are more inclined to keep the hard evidence when a leniency program is available. Finally, we demonstrate that firms are more likely to destroy the hard evidence when the collusive profits-fine ratio increases.

Keywords: antitrust; cartels; enforcement policy; hard evidence; leniency programs (search for similar items in EconPapers)
JEL-codes: K21 K4 L4 (search for similar items in EconPapers)
Date: 2011-05-17
New Economics Papers: this item is included in nep-com and nep-law
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