Abstract

http://ssrn.com/abstract=1826324
 
 

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Prosecution and Leniency Programs: The Role of Bluffing in Opening Investigations


Julien Sauvagnat


Toulouse School of Economics

September 2013


Abstract:     
This paper characterizes the optimal investigation and leniency policies when the Competition Authority is privately informed about the strength of a cartel case. I show that the Competition Authority can then exploit firms' uncertainty about the risk of conviction to obtain confessions even when the case is weak. More generally, I show that offering full leniency allows the Competition Authority to open more successful investigations (what I refer to as the `activism effect' of leniency), which overall raises both cartel desistance and cartel deterrence. Finally, I discuss the policy implications of the model.

Number of Pages in PDF File: 31

Keywords: Antitrust Law and Policies, Cartels, Collusion, Self-Reporting

JEL Classification: K42, K21, L41

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Date posted: May 2, 2011 ; Last revised: November 23, 2014

Suggested Citation

Sauvagnat, Julien, Prosecution and Leniency Programs: The Role of Bluffing in Opening Investigations (September 2013). Available at SSRN: http://ssrn.com/abstract=1826324 or http://dx.doi.org/10.2139/ssrn.1826324

Contact Information

Julien Sauvagnat (Contact Author)
Toulouse School of Economics ( email )
Place Anatole-France
Toulouse Cedex, F-31042
France
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