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Corporate Leniency Programs When Firms Have Private Information: The Push of Prosecution and the Pull of Pre‐Emption

27 Pages Posted: 26 Mar 2013  

Joseph E. Harrington Jr

University of Pennsylvania

Date Written: March 2013

Abstract

A corporate leniency program provides relief from government penalties to the first member of a cartel to cooperate with the authorities. This study explores the incentives to apply for leniency when each cartel member has private information as to the likelihood that the competition authority will be able to convict them without a cooperating firm. A firm may apply for leniency because it fears being convicted (‘prosecution effect’) or because it fears another firm will apply (‘pre‐emption effect’). Policies by the competition authority to magnify concerns about pre‐emption - and thereby induce greater use of the leniency program - are also explored.

Suggested Citation

Harrington Jr, Joseph E., Corporate Leniency Programs When Firms Have Private Information: The Push of Prosecution and the Pull of Pre‐Emption (March 2013). The Journal of Industrial Economics, Vol. 61, Issue 1, pp. 1-27, 2013. Available at SSRN: https://ssrn.com/abstract=2239534 or http://dx.doi.org/10.1111/joie.12014

Joseph E. Harrington Jr (Contact Author)

University of Pennsylvania ( email )

Philadelphia, PA 19102
Philadelphia, PA 19104

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