The effectiveness of leniency programs when firms choose the degree of collusion

Emons, Winand (2020). The effectiveness of leniency programs when firms choose the degree of collusion. International Journal of Industrial Organization, 70, p. 102619. Elsevier 10.1016/j.ijindorg.2020.102619

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An antitrust authority grants leniency pre- and post-investigation. 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. With bare pre-investigation leniency, deterrence is better than without leniency. If firms are sufficiently impatient, granting leniency pre- and post- is better than merely pre-investigation.

Item Type:

Journal Article (Original Article)

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

ISSN:

0167-7187

Publisher:

Elsevier

Language:

English

Submitter:

Dino Collalti

Date Deposited:

11 Jan 2021 14:14

Last Modified:

10 Feb 2021 13:45

Publisher DOI:

10.1016/j.ijindorg.2020.102619

BORIS DOI:

10.48350/150269

URI:

https://boris.unibe.ch/id/eprint/150269

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