Group size effects on cartel formation and the enforcement power of leniency programs

Hamaguchi, Yasuyo; Kawagoe, Toshiji; Shibata, Aiko

doi:10.1016/j.ijindorg.2008.05.005

Cited by 44 publications

(32 citation statements)

References 9 publications

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“…Yet, the paper confirms the deterring effect of leniency on cartel formation. Hamaguchi, Kawagoe, and Shibata () experimentally analyze various types of leniency policies and provide confirmation on the effect of Spagnolo's () reward scheme…”

Section: Literature Reviewmentioning

confidence: 91%

“…Yet, the paper confirms the deterring effect of leniency on cartel formation. Hamaguchi, Kawagoe, and Shibata (2009) experimentally analyze various types of leniency policies and provide confirmation on the effect of Spagnolo's (2004) reward scheme Further papers focus on the effect of a discriminatory leniency policy, where ringleaders are excluded from the leniency program. Bos and Wandschneider (2013) emphasize that this policy may lead to higher cartel prices than under a nondiscriminatory policy.…”

Section: Literature Reviewmentioning

confidence: 99%

See 1 more Smart Citation

Do discriminatory leniency policies fight hard‐core cartels?

Clemens¹,

Rau

2018

Economics Manag Strategy

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This paper experimentally analyzes the effects of nondiscriminatory and discriminatory leniency policies on hard‐core cartels. We design a mechanism to form a hard‐core cartel, which allows that multiple ringleaders emerge. Ringleaders often take a leading role in the coordination and formation of hard‐core cartels. A leniency policy that grants amnesty to all “whistle‐blowers” except for ringleaders may therefore reduce the incentive to become a ringleader and disrupt cartel formation. Yet, our experimental results show that whistle‐blowing rarely occurs. Paradoxically, the discriminatory leniency policy induces firms to become ringleaders. We find that firms create trust among other firms when acting as ringleaders. This signaling effect ultimately facilitates coordination in the explicit cartel.

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Section: Literature Reviewmentioning

confidence: 91%

Section: Literature Reviewmentioning

confidence: 99%

Do discriminatory leniency policies fight hard‐core cartels?

Clemens¹,

Rau

2018

Economics Manag Strategy

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show abstract

“…5 5 We are aware of two other previous experimental studies dealing with these issues, though in very di¤erent environments. Hamaguchi et al (2009) perform an experiment where subjects are forced to collude, and look at the e¤ects of leniency on the speed with which cartels are dismantled. Hamaguchi et al (2007) study the e¤ects of leniency in a repeated auction game, in which subjects have to decide who will win the auction.…”

Section: Related Literaturementioning

confidence: 99%

fines, leniency, and rewards in antitrust

Bigoni¹,

Fridolfsson²,

Coq³

et al. 2012

The RAND J of Economics

165

142

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This paper reports results from an experiment studying how …nes, leniency and rewards for whistleblowers a¤ect cartel formation and prices. Antitrust without leniency reduces cartel formation but increases cartel prices: subjects use costly …nes as punishments. Leniency improves antitrust by strengthening deterrence but stabilizes surviving cartels: subjects appear to anticipate the lower post-conviction prices after reports/leniency. With rewards, prices fall at the competitive level.Overall our results suggest a strong cartel deterrence potential for well-run leniency and reward schemes. These …ndings may also be relevant for similar white-collar organized crimes, like corruption and fraud.JEL codes: C73, C92 and L41

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“…7 Closely related are also Miller (2009) and Acconcia et al (2009), who empirically evaluate the deterrence effects of leniency policies by looking at changes in the rate of detected cartels after the introduction of such policies. 8 To our knowledge, ours is the first laboratory experiment considering different levels of fines and probabilities of apprehension trying 6 See also Krajčcová and Ortmann (2008) and Hamaguchi et al (2009). Our work is of course also related to recent experiments on collusion and oligopoly like Huck et al (1999), Offerman et al (2002), Huck et al (2004), Engelmann and Müller (2008), Potters (2009).…”

mentioning

confidence: 74%

Trust, Salience and Deterrence: Evidence from an Antitrust Experiment

et al. 2011

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractWe present results from a laboratory experiment identifying the main channels through which different law enforcement strategies deter organized economic crime. The absolute level of a fine has a strong deterrence effect, even when the exogenous probability of apprehension is zero. This effect appears to be driven by distrust or fear of betrayal, as it increases significantly when the incentives to betray partners are strengthened by policies offering amnesty to "turncoat whistleblowers". We also document a strong deterrence effect of the sum of fines paid in the past, which suggests a significant role for salience or availability heuristic in law enforcement.

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Group size effects on cartel formation and the enforcement power of leniency programs

Cited by 44 publications

References 9 publications

Do discriminatory leniency policies fight hard‐core cartels?

Do discriminatory leniency policies fight hard‐core cartels?

fines, leniency, and rewards in antitrust

Trust, Salience and Deterrence: Evidence from an Antitrust Experiment

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