Abstract

http://ssrn.com/abstract=1146347
 
 

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From Overt to Tacit Collusion: Experimental Evidence on the Adverse Effects of Corporate Leniency Programs


Jeroen Hinloopen


University of Amsterdam; Tinbergen Institute

Adriaan R. Soetevent


University of Groningen; Tinbergen Institute

May 2008

Tinbergen Institute Discussion Paper No. TI 2008-059/1

Abstract:     
Recent laboratory experiments support the popular view that the introduction of corporate leniency programs has significantly decreased cartel activity. The design of these repeated game experiments however is such that engaging in illegal price discussions is the only way for subjects to avoid the one-shot competitive equilibrium. Subjects in the experiment of this paper have multiple feasible Nash equilibrium strategies to avoid the competitive equilibrium. These strategies differ in the difficulty of the coordination problem they have to solve. The experimental results show that if the efforts of the antitrust authority and the leniency program are directed exclusively to the most straightforward collusive scheme, subjects manage to switch to a more intricate form of coordination. This shift from overt collusion to tacit collusion questions the acclaimed success of corporate leniency programs.

Number of Pages in PDF File: 20

Keywords: overt collusion, tacit collusion, corporate leniency program, antitrust policy

JEL Classification: C72, C92, L41

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Date posted: June 16, 2008  

Suggested Citation

Hinloopen, Jeroen and Soetevent, Adriaan R., From Overt to Tacit Collusion: Experimental Evidence on the Adverse Effects of Corporate Leniency Programs (May 2008). Available at SSRN: http://ssrn.com/abstract=1146347 or http://dx.doi.org/10.2139/ssrn.1146347

Contact Information

Jeroen Hinloopen (Contact Author)
University of Amsterdam ( email )
Roetersstraat 11
Amsterdam, North Holland 1018 WB
Netherlands
+31 20 525 42 52 (Phone)
+31 20 525 42 54 (Fax)
HOME PAGE: http://www.fee.uva.nl/io/jhinloopen
Tinbergen Institute ( email )
Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands
Adriaan R. Soetevent
University of Groningen ( email )
P.O. Box 800
9700 AV Groningen
Netherlands
++ 31 50 363 7018 (Phone)
HOME PAGE: http://www.soetevent.com
Tinbergen Institute
Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands
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