Working Paper: CEPR ID: DP4840
Authors: Giancarlo Spagnolo
Abstract: Leniency programmes (or policies) reduce sanctions against cartel members that self-report to the Antitrust Authority. We focus on their ability to directly deter cartels and analogous criminal organizations by undermining internal trust, increasing individual incentives to ?cheat? on partners. Optimally designed ?courageous? leniency programmes reward the first party that reports sufficient information with the fines paid by all other parties, and with finitely high fines achieve the first best. ?Moderate? leniency programmes that only reduce or cancel sanctions, as implemented in reality, may also destabilize and deter cartels by (a) protecting agents that defect (and report) from fines; (b) protecting them from other agents? punishment; and (c) increasing the riskiness of taking part to a cartel.
Keywords: amnesty; antitrust; cartels; collusion; competition policy; corruption; immunity; law enforcement; leniency; oligopoly; organized crime; repeated games; risky cooperation; whistleblowers
JEL Codes: L13; L44
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Implementation of leniency programs (K21) | Stability of cartel agreements (L12) |
| Moderate leniency programs (K21) | Incentives for cartel members to report (K21) |
| High-powered leniency programs (K21) | Sustainability of collusive agreements (L42) |