The Effectiveness of Leniency Programs when Firms choose the Degree of Collusion

Emons, Winand (October 2018). The Effectiveness of Leniency Programs when Firms choose the Degree of Collusion (Discussion Papers 18-16). Bern: Department of Economics

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An antitrust authority deters collusion using fines and a leniency program. It chooses the probability of an investigation. Firms pick the degree of collusion: The more they collude, the higher are profits, but so is the probability of detection. Firms thus trade-off higher profits
against higher expected fines. If firms are sufficiently patient, leniency is ineffective; it may even increase collusion. Increasing the probability of an investigation at low levels does not increase deterrence. Increasing the probability of an investigation at high levels reduces collusion, yet never completely.

Item Type:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Emons, Winand

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

Discussion Papers

Publisher:

Department of Economics

Language:

English

Submitter:

Lars Tschannen

Date Deposited:

03 Sep 2020 08:12

Last Modified:

03 Sep 2020 08:12

JEL Classification:

D43, K21, K42, L40

BORIS DOI:

10.7892/boris.145867

URI:

https://boris.unibe.ch/id/eprint/145867

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