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Do leniency policies facilitate collusion? Experimental evidence

Georg Clemens and Holger Rau ()

No 130, DICE Discussion Papers from University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: This paper experimentally analyzes the cartel coordination challenge induced by the discrimination of cartel ringleaders in leniency policies. Ringleaders often take a leading role in the coordination and formation of a cartel. A leniency policy which grants amnesty to all whistleblowers except for ringleaders may therefore reduce the incentive to become a ringleader and may disrupt cartel formation. We analyze discriminatory and non-discriminatory leniency policies in a multi-stage cartel formation experiment where multiple ringleaders may emerge. Although theory predicts that cartels will always be reported, whistleblowing rarely occurs. Paradoxically the discriminatory leniency policy induces more firms to become ringleaders, which ultimately facilitates coordination in the cartel.

Keywords: Cartels; Leniency Programs; Ringleader Discrimination; Experiment (search for similar items in EconPapers)
JEL-codes: C92 K21 L41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-exp and nep-law
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:130

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