The Impact of the Corporate Leniency Program on Cartel Formation and the Cartel Price Path

Joe Chen and Joseph Harrington ()
Additional contact information
Joe Chen: Faculty of Economics, University of Tokyo

No CIRJE-F-358, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: Previous research exploring the effect of corporate leniency programs has modelled the oligopoly stage game as a Prisoners' Dilemma. Using numerical analysis, we consider the Bertrand price game and allow the probability of detection and penalties to be sensitive to firms' prices. Consistent with earlier results, a maximal leniency program necessarily makes collusion more difficult. However, we also find that par-tial leniency programs - such as in the U.S.- can make collusion easier compared too offering no leniency. We also show that even if cartel formation is not deterred, a leniency program can reduce the prices charged by firms.

Pages: 31 pages
Date: 2005-08
New Economics Papers: this item is included in nep-com and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: he Impact of the Corporate Leniency Program on Cartel Formation and the Cartel Price Path (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:2005cf358

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