Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87019
Authors: 
Houba, Harold
Motchenkova, Evgenia
Wen, Quan
Year of Publication: 
2009
Series/Report no.: 
Tinbergen Institute Discussion Paper 09-081/1
Abstract: 
We analyze maximal cartel prices in infinitely-repeated oligopoly models under leniency where fines are linked to illegal gains, as often outlined in existing antitrust regulation, and detection probabilities depend on the degree of collusion. We introduce cartel culture that describes how likely cartels persist after each conviction. Our analysis disentangles the effects of traditional antitrust regulation, leniency, and cartel strategies. Without rewards to the strictly-first reporter, leniency cannot reduce maximal cartel prices below those under traditional regulation. Moreover, in order to avoid adverse effects fine reductions should be moderate in case of multiple reporters. Our results extend the current literature and partially support existing leniency programs.
Subjects: 
Cartel
Antitrust
Competition Policy
Leniency Program
Self-reporting
Repeated Game
JEL: 
L41
K21
C72
Document Type: 
Working Paper

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