Thursday, July 19, 2007
Posted by D. Daniel Sokol
Cartels scholarship is a hot field. In an addition to the growing literature in this area,
and Thomas von Ungern-Sternberg, both of the University of Lausanne - Department of Economics, write about Leniency Programs in a Multimarket Setting: Amnesty Plus and Penalty Plus.
ABSTRACT: We examine the effects of Amnesty Plus and Penalty Plus, influencing firms' whistle blowing incentives in one market, on their self-reporting decision in another market. Amnesty Plus and Penalty Plus are proactive US strategies which aim at triggering multiple confessions by increasing the incentives of already convicted firms to report in another market where they collude. Predictably, conditional on conviction of one cartel, Amnesty Plus and Penalty Plus strengthen firms' incentives to report the remaining cartel. However, Amnesty Plus and Penalty Plus have an ambiguous impact on firms' incentives to apply for amnesty in the first place: On the one hand, Amnesty Plus and Penalty Plus may help to sustain a cartel, otherwise reported under the EC policy. On the other hand, Amnesty Plus and Penalty Plus may induce immediate reporting of both cartels whereas only one of them would have been reported under the EC Leniency Program.