Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88909
Authors: 
Clemens, Georg
Rau, Holger A.
Year of Publication: 
2014
Series/Report no.: 
DICE Discussion Paper 130
Abstract: 
This paper experimentally analyzes the cartel coordination challenge induced by the discrimination of cartel ringleaders in leniency policies. Ringleaders often take a leading role in the coordination and formation of a cartel. A leniency policy which grants amnesty to all whistleblowers except for ringleaders may therefore reduce the incentive to become a ringleader and may disrupt cartel formation. We analyze discriminatory and non-discriminatory leniency policies in a multi-stage cartel formation experiment where multiple ringleaders may emerge. Although theory predicts that cartels will always be reported, whistleblowing rarely occurs. Paradoxically the discriminatory leniency policy induces more firms to become ringleaders, which ultimately facilitates coordination in the cartel.
Subjects: 
Cartels
Leniency Programs
Ringleader Discrimination
Experiment
JEL: 
C92
K21
L41
ISBN: 
978-3-86304-129-8
Document Type: 
Working Paper

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