Working Paper: CEPR ID: DP10106
Authors: Marc Blatter; Winand Emons; Silvio Sticher
Abstract: An antitrust authority deters collusion using fines and a leniency program. Unlike in most of the earlier literature, our firms have imperfect cumulative evidence of the collusion. That is, cartel conviction is not automatic if one firm reports: reporting makes conviction only more likely, the more so, the more firms report. Furthermore, the evidence is distributed asymmetrically among firms. Asymmetry of the evidence can increase the cost of deterrence if the high-evidence firm chooses to remain silent. Minimum-evidence standards may counteract this effect. Under a marker system only one firm reports; this may increase the cost of deterrence.
Keywords: Antitrust; Cartels; Deterrence; Evidence; Leniency
JEL Codes: D43; K21; K42; L40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Antitrust Authority (AA) (L40) | deterrence of collusion (L12) |
| asymmetry of evidence (D80) | deterrence costs (K40) |
| high-evidence firm silent & low-evidence firm reports (G33) | deterrence costs (K40) |
| minimum evidence standards (K40) | AA's enforcement costs (H26) |
| high-evidence firm qualifies for leniency (K21) | likelihood of conviction (K14) |
| marker system (Y91) | AA's ability to deter collusion (K21) |
| evidence availability (K41) | AA's ability to deter collusion (K21) |