Abstract

http://ssrn.com/abstract=1985816
 
 

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Evaluating Leniency with Missing Information on Undetected Cartels: Exploring Time-Varying Policy Impacts on Cartel Duration


Jun Zhou


Zhejiang Wanli University; Tilburg Law and Economics Center (TILEC); Bruegel

April 1, 2015


Abstract:     
This paper examines the effects of European Commission's (EC) new leniency program on the EC's capabilities in detecting and deterring cartels. As a supplementary analysis, the US leniency is studied. I discuss a dynamic model of cartel formation and dissolution to illustrate how changes in antitrust policies and economic conditions might affect cartel duration. Comparative statics results are then corroborated with empirical estimates of hazard functions adjusted to account for both the heterogeneity of cartels and the time-varying policy impacts suggested by theory. Contrary to earlier studies, my statistical tests are consistent with the theoretic predictions that following an efficacious leniency program, the average duration of discovered cartels rises in the short run and falls in the long run. The results shed light on the design of enforcement programs against cartels and other forms of conspiracy.

Number of Pages in PDF File: 52

Keywords: evaluation of antitrust policies, time-varying policy effects, sample selection bias, leniency, semi-parametric estimation

JEL Classification: D43, K21, K42, L13


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Date posted: January 17, 2012 ; Last revised: December 11, 2015

Suggested Citation

Zhou, Jun, Evaluating Leniency with Missing Information on Undetected Cartels: Exploring Time-Varying Policy Impacts on Cartel Duration (April 1, 2015). Available at SSRN: http://ssrn.com/abstract=1985816 or http://dx.doi.org/10.2139/ssrn.1985816

Contact Information

Jun Zhou (Contact Author)
Zhejiang Wanli University ( email )
Ninbo, Zhejiang
China
Tilburg Law and Economics Center (TILEC) ( email )
Warandelaan 2
Tilburg, 5000 LE
Netherlands
Bruegel ( email )
Rue de la Charité 33
B-1210 Brussels Belgium
Belgium
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