12 Pages Posted: 7 Jan 2005
Date Written: January 2005
This paper analyzes the incentives for 'whistleblowing' on a cartel under different assumptions about market demand and firms' costs. We introduce the concept of a 'critical expected penalty' to demonstrate the crucial role of such demand and cost parameters in determining firms' choices. We identify some counter-intuitive results, and consider what forces may have to obtain in order to explain observed behavior.
Keywords: cartels, cost heterogeneity, whistleblowing.
JEL Classification: D43, L41, L43
Suggested Citation: Suggested Citation