Maximal Cartel Pricing and Leniency Programs
Tinbergen Institute Discussion Paper No. 08-120/1
38 Pages Posted: 18 Dec 2008
Date Written: December 2008
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.
Keywords: Cartel, Antitrust Policy, Antitrust Law, Leniency Program, Self-reporting, re-peated game
JEL Classification: L41, K21, C72
Suggested Citation: Suggested Citation