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The effects of private damage claims on cartel stability: Experimental evidence

Olivia Bodnar, Melinda Fremerey, Hans-Theo Normann and Jannika Schad

No 315, DICE Discussion Papers from University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: Private damage claims against cartels may have negative effects on leniency: whereas whistleblowers obtain full immunity regarding the public cartel fines, they have no or only restricted protection against private third-party damage claims. This may stabilize cartels. We run an experiment to study this issue. Firms choose whether to join a cartel, may apply for leniency afterwards, and then potentially face private damages. We find that the implementation of private damage claims decreases cartel formation but makes cartels indeed more stable. The overall impact of private damage claims is positive: cartel prevalence declines.

Keywords: private damage claims; cartel stability; laboratory experiment; leniency (search for similar items in EconPapers)
JEL-codes: C90 L41 L44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-exp and nep-law
Date: 2019
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