Wednesday, April 28, 2010
Posted by D. Daniel Sokol
Jay Pil Choi, Michigan State University - Department of Economics and Heiko A. Gerlach, University of Auckland - Department of Economics explore Global Cartels, Leniency Programs and International Antitrust Cooperation.
ABSTRACT: In this paper we analyze cartel formation and self-reporting incentives when firms operate in several geographical markets and face antitrust enforcement in different jurisdictions. We are concerned with the effectiveness of leniency programs and the benefits of international antitrust cooperation between agencies. When international antitrust prosecution is uncoordinated, multi-market contact allows firms to reduce the amount of self-reporting in equilibrium and sustain cartels more effectively. We then discuss the effects of information sharing among antitrust authorities as a function of how much and which type of information is exchanged. We show that extensive information sharing might have an adverse effect on self-reporting by cartel members.