Crime and Punishment: When Tougher Antitrust Enforcement Leads to Higher Overcharge

37 Pages Posted: 27 Feb 2013

See all articles by Sissel Jensen

Sissel Jensen

Norwegian School of Economics (NHH) - Department of Economics

Ola Kvaloy

University of Stavanger

Trond E. Olsen

Norwegian School of Economics (NHH) - Department of Business and Management Science; CESifo (Center for Economic Studies and Ifo Institute)

Lars Sorgard

Norwegian School of Economics and Business Administration (NHH); Norwegian School of Economics (NHH) - Department of Economics

Date Written: February 18, 2013

Abstract

The economics of crime and punishment postulates that higher punishment leads to lower crime levels, or less severe crime. It is however hard to get empirical support for this intuitive relationship. This paper offers a model that contributes to explain why this is the case. We show that if criminals can spend resources to reduce the probability of being detected, then a higher general punishment level can increase the crime level. In the context of antitrust enforcement, it is shown that competition authorities who attempt to Â…fight cartels by means of tougher sanctions for all offenders may actually lead cartels to increase their overcharge when leniency programs are in place.

Keywords: Antitrust enforcement leniency programs, economics of crime

Suggested Citation

Jensen, Sissel and Kvaloy, Ola and Olsen, Trond E. and Sorgard, Lars, Crime and Punishment: When Tougher Antitrust Enforcement Leads to Higher Overcharge (February 18, 2013). NHH Dept. of Economics Discussion Paper No. 04/2013, Available at SSRN: https://ssrn.com/abstract=2223991 or http://dx.doi.org/10.2139/ssrn.2223991

Sissel Jensen

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway

Ola Kvaloy

University of Stavanger ( email )

N-4036 Stavanger
Norway

Trond E. Olsen

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
N-5045 Bergen
Norway
+47 55 95 99 76 (Phone)
+47 55 95 96 50 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.cesifo.de

Lars Sorgard (Contact Author)

Norwegian School of Economics and Business Administration (NHH) ( email )

Helleveien 30
Bergen, NO-5045
Norway
+47 5 595 9723 (Phone)
+47 5 595 9543 (Fax)

Norwegian School of Economics (NHH) - Department of Economics

Helleveien 30
N-5035 Bergen
Norway

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