Friday, January 25, 2008
Posted by D. Daniel Sokol
A team of economists at Oxera have authored a piece on Truth or Dare: Leniency and the Fight Against Cartels in which they apply experimental economics to the study of collusion.
ABSTRACT: In 2007 one firm involved in the gas-insulated switchgears cartel escaped a potential fine of €215m by alerting the EU’s competition authority to the cartel’s existence. Leniency programmes, where cartel participants that inform and assist the authorities are granted immunity from fines, are a central part of cartel enforcement in competition policy around the world. However, despite having led to many successful cartel investigations, there are still questions concerning their effects. Can the new approach of experimental economics provide some insights?