Blowing the Whistle

Abstract

Leniency clauses, offering cartelists legal immunity if they blow the whistle on each other, is a recent anti-trust innovation. The authorities wish to thwart cartels and promote competition. This effect is not evident, however; whistle-blowing may enforce trust and collusion by providing a tool for cartelists to punish each other. We examine the impact of leniency law, and other rules, theoretically and experimentally.

Keywords: Anti-trust, leniency, immunity, amnesty, blow the whistle, cartels, price competition, Bertrand model, experiment, communication

JEL Classification: C92, D43, L13