23 Pages Posted: 27 Aug 2010
Date Written: August 26, 2010
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.
Keywords: Collusion, Antitrust, Self-reporting, Judicial Errors, Repeated Game
JEL Classification: K21, L41, C72
Suggested Citation: Suggested Citation
Ghebrihiwet, Nahom and Motchenkova, Evgenia, Leniency Programs in the Presence of Judicial Errors (August 26, 2010). TILEC Discussion Paper No. 2010-030. Available at SSRN: https://ssrn.com/abstract=1666111 or http://dx.doi.org/10.2139/ssrn.1666111