Working Paper No. 738

Fines, Leniency and Rewards in Antitrust

Published: April 24, 2008, revised August 2009, and November 2011Pages: 32Keywords: Cartels; Collusion; Coordination; Competition policy; Deterrence; Desistance; Law enforcement; Price-fixing; Punishment; Recidivism; WhistleblowersJEL-codes: C73; C92; L41
Published version

Fines, Leniency and Rewards in Antitrust Maria Bigoni, Sven-Olof Fridolfsson, Chloé Le Coq and Giancarlo Spagnolo


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.








 

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The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.

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