Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81462
Authors: 
Bigoni, Maria
Fridolfsson, Sven-Olof
Le Coq, Chloé
Spagnolo, Giancarlo
Year of Publication: 
2008
Series/Report no.: 
IFN Working Paper 738
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.
Subjects: 
Cartels
Collusion
Coordination
Competition policy
Deterrence
Desistance
Law enforcement
Price-fixing
Punishment
Recidivism
Whistleblowers
JEL: 
C73
C92
L41
Document Type: 
Working Paper

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