Maximal Cartel Pricing and Leniency Programs
VU University Amsterdam - Department of Econometrics; Tinbergen Institute
VU University Amsterdam - Department of Economics; TILEC
Vanderbilt University - College of Arts and Science - Department of Economics
TILEC Discussion Paper No. 2008-046
Tinbergen Institute Discussion Paper No. 08-120/1
For a general class of oligopoly models with price competition, we analyze the impact of ex-ante leniency programs in antitrust regulation on the endogenous maximal-sustainable cartel price. This impact depends upon industry characteristics including its cartel culture. Our analysis disentangles the effects of traditional antitrust regulation and the leniency program. Ex-ante leniency programs are effective if and only if these offer substantial rewards to the self-reporting firm. This is in contrast to currently employed programs that are therefore ineffective.
Number of Pages in PDF File: 38
Keywords: Cartel, Antitrust Policy, Antitrust Law, Leniency Program, Self-reporting, re-peated game
JEL Classification: L41, K21, C72
Date posted: December 18, 2008
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