On the design of leniency programs by Zhijun Chen and Patrick Rey

By:

Chen, Zhijun [author]

Contributor(s):

Rey, Patrick [co author]

Material type: Text

TextSeries: The journal of law and economics ; Volume , number ,Chicago University of Chicago Press 2013Content type:

text

Media type:

unmediated

Carrier type:

volume

ISSN:

00222186

Subject(s):

LOC classification:

HB73 JOU

Online resources:

Click here to access online

Summary: Leniency programs contribute to destabilizing collusion but can also be abused and generate perverse effects. This paper develops a simple model capturing this trade-off, which we use to relate the optimal leniency policy (the carrot) to the effectiveness of investigations (the stick). We show that it is always desirable to offer some leniency before an investigation is launched; it is also optimal to offer some leniency once an investigation is underway when investigations are unlikely to succeed in uncovering cartels, absent self-reporting. Our analysis also confirms the usefulness of restricting leniency to the first informant only; in contrast, it does not support prohibiting leniency for repeat offenders.

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Holdings
Item type	Current library	Call number	Vol info	Copy number	Status	Notes	Date due	Barcode
Journal Article	Main Library - Special Collections	HB73 JOU (Browse shelf(Opens below))	Vol. 56, no.4 (pages 917-958)	SP20078	Not for loan	For in house only

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Leniency programs contribute to destabilizing collusion but can also be abused and generate perverse effects. This paper develops a simple model capturing this trade-off, which we use to relate the optimal leniency policy (the carrot) to the effectiveness of investigations (the stick). We show that it is always desirable to offer some leniency before an investigation is launched; it is also optimal to offer some leniency once an investigation is underway when investigations are unlikely to succeed in uncovering cartels, absent self-reporting. Our analysis also confirms the usefulness of restricting leniency to the first informant only; in contrast, it does not support prohibiting leniency for repeat offenders.

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