Link to the startpage
 
Contact  |   Site map  |     På svenska
Working Paper No. 738
Fines, Leniency and Rewards in Antitrust: An Experiment
Author: Maria Bigoni, Sven-Olof Fridolfsson, Chloé Le Coq and Giancarlo Spagnolo
Keywords: Cartels; Collusion; Coordination; Competition policy; Deterrence; Desistance; Law enforcement; Price-fixing; Punishment; Recidivism; Whistleblowers
Pages: 40
Published: April 24, 2008, revised August 6, 2009
JEL-codes: C73; C92; L41
Abstract

This paper reports results from an experiment studying how fines, leniency programs and reward schemes for whistleblowers affect cartel formation and prices. Antitrust without leniency reduces cartel formation, but increases cartel prices: subjects use costly fines as (altruistic) punishments. Leniency further increases deterrence, but stabilizes surviving cartels: subjects appear to anticipate harsher times after defections as leniency reduces recidivism and lowers post-conviction prices. With rewards, cartels are reported systematically and prices finally fall. If a ringleader is excluded from leniency, deterrence is unaffected but prices grow. Differences between treatments in Stockholm and Rome suggest culture may affect optimal law enforcement.








 

Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden | Ph: +46-(0)8-665 45 00 | info@ifn.se