Optimal Leniency Programs

FEEM Working Paper No. 42.2000

30 Pages Posted: 14 Aug 2000

See all articles by Giancarlo Spagnolo

Giancarlo Spagnolo

Stockholm School of Economics (SITE); Centre for Economic Policy Research (CEPR); University of Rome 'Tor Vergata'; EIEF

Date Written: May 13, 2000

Abstract

Leniency programs reduce sanctions for law violators that self-report. I focus on their ability to deter price-fixing cartels - and organized crime in general - by increasing incentives to "cheat" on partners. Moderate leniency programs that reduce/cancel sanctions for a spontaneously reporting party - as those normally implemented in reality - cannot affect cartels and other organized crime. Courageous leniency programs that reward spontaneously self-reporting parties may instead completely and costlessly deter them. When fines/rewards are pure transfers, optimal leniency programs maximize rewards for self-reporting. When financing rewards is costly, optimal leniency programs are restricted to the first reporting party and make this residual claimant for the fines paid by the others.

Keywords: Antitrust law and policy; Self-reporting; Cartels; Collusion; Crime deterrence; Organized crime; Law enforcement

JEL Classification: K42, K21

Suggested Citation

Spagnolo, Giancarlo, Optimal Leniency Programs (May 13, 2000). FEEM Working Paper No. 42.2000. Available at SSRN: https://ssrn.com/abstract=235092 or http://dx.doi.org/10.2139/ssrn.235092

Giancarlo Spagnolo (Contact Author)

Stockholm School of Economics (SITE) ( email )

P.O. Box 6501
Stockholm
Sweden

HOME PAGE: http://https://sites.google.com/site/giancarlospagnoloshomepage/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Rome 'Tor Vergata' ( email )

Faculty of Economics - DEI
Via Columbia 2
Rome, RM 00133
Italy

EIEF ( email )

Via Due Macelli, 73
Rome, 00187
Italy

HOME PAGE: http://WWW.EIEF.IT

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