Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86317
Authors: 
Hinloopen, Jeroen
Soetevent, Adriaan
Year of Publication: 
2006
Series/Report no.: 
Tinbergen Institute Discussion Paper 06-067/1
Abstract: 
An experiment is conducted were subjects interact repeatedly to examine the effect of a particular leniency program on cartel formation, cartel stability and cartel recidivism. The program leads to lower prices for three reasons. First, non-cooperators are more persistent in their behavior which effectively blocks cartel formation in their respective groups. Second, members of groups that do form a cartel defect more often thus reducing the average cartel lifetime. Third, the difference between the agreed-upon price and the undercutting price is larger. The leniency program does not however affect the probability that a dismantled cartel is re-established.
Subjects: 
cartels
corporate leniency programs
Bertrand competition
experiment
JEL: 
C92
D43
L41
Document Type: 
Working Paper

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