Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Thursday, September 9, 2010

Leniency Programs in the Presence of Judicial Errors

Posted by D. Daniel Sokol

Nahom Ghebrihiwet and Evgenia Motchenkova, VU University Amsterdam - Department of Economics, TILEC
discuss Leniency Programs in the Presence of Judicial Errors.

ABSTRACT: We analyze the effects of antitrust and leniency programs in a repeated oligopoly model outlined in Motta and Polo (2003). We extend their framework by including the possibility of Type I judicial errors and pre-trial settlements. Through comparison of our results to the earlier results we come to a number of novel conclusions. Firstly, antitrust enforcement in the presence of judicial errors is less effective and ex-ante deterrence is weaker than was predicted by Motta and Polo (2003). Secondly, adverse effects of leniency programs are underestimated by the traditional approach, which does not take Type I judicial errors into account.

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