2015

Trust, Leniency and Deterrence

Reprint No. 2015:62

Author(s): Maria Bigoni, Sven-Olof Fridolfsson, Chloé Le Coq and Giancarlo SpagnoloYear: 2015 Title: Journal of Law, Economics and Organization Volume (No.): 31 (4) Pages: 663–689
Online article (restrictions may apply)
Preliminary version


This article presents results from a laboratory experiment studying the channels through which different law enforcement strategies deter cartel formation. With leniency policies offering immunity to the first reporting party, a high fine is the main determinant of deterrence, having a strong effect even when the probability of exogenous detection is zero. Deterrence appears to be mainly driven by “distrust”; here, the fear of partners deviating and reporting. Absent leniency, the probability of detection and the expected fine matter more, and low fines are exploited to punish defections. The results appear relevant to several other forms of crimes that share cartels’ strategic features, including corruption and financial fraud.


Reference:
Bigoni, Maria, Sven-Olof Fridolfsson, Chloé Le Coq and Giancarlo Spagnolo (2015), "Trust, Leniency and Deterrence ". Journal of Law, Economics and Organization 31(4), 663–689.

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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