Leniency Programs in the Presence of Judicial Errors

Abstract:     
We analyze the effects of antitrust and leniency programs in a repeated oligopoly model outlined in Motta and Polo (2003). We extend their framework by including the possibility of Type I judicial errors and pre-trial settlements. Through comparison of our results to the earlier results we come to a number of novel conclusions. Firstly, antitrust enforcement in the presence of judicial errors is less effective and ex-ante deterrence is weaker than was predicted by Motta and Polo (2003). Secondly, adverse effects of leniency programs are underestimated by the traditional approach, which does not take Type I judicial errors into account.

Number of Pages in PDF File: 23

Keywords: Collusion, Antitrust, Self-reporting, Judicial Errors, Repeated Game

JEL Classification: K21, L41, C72

working papers series