Leniency Policies and Cartel Success: An Experiment

27 Pages Posted: 8 Jul 2021 Last revised: 1 Mar 2022

See all articles by Jeong Yeol Kim

Jeong Yeol Kim

University of Arizona

Charles Noussair

University of Arizona

Date Written: June 30, 2021

Abstract

Cartels are often fought by granting leniency, in the form of forgiveness of penalties, to whistle-blowers. This study employs a laboratory experiment to compare leniency programs that differ with respect to fine size and whether a second whistle-blower may apply for leniency. The results show that leniency does not affect the probability that a cartel forms, but is effective in exposing cartels and thereby inhibiting cartel success. Higher fines are more effective, but allowing leniency to a second whistle-blower is no more effective than granting leniency to only one whistle-blower.

Keywords: Antitrust, Cartel, Leniency policy, Experiment

JEL Classification: K21, K41, L4

Suggested Citation

Kim, Jeong Yeol and Noussair, Charles, Leniency Policies and Cartel Success: An Experiment (June 30, 2021). Available at SSRN: https://ssrn.com/abstract=3877715 or http://dx.doi.org/10.2139/ssrn.3877715

Jeong Yeol Kim (Contact Author)

University of Arizona ( email )

McClelland Hall
1130 E Helen St
Tucson, AZ 85721
United States

Charles Noussair

University of Arizona ( email )

McClelland Hall
Tucson, AZ 85721-0108
United States

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