Trust and Recidivism; the Partial Success of Corporate Leniency Program in the Laboratory

Arbeitspapier

An experiment is conducted were subjects interact repeatedly to examine the effect of a particular leniency program on cartel formation, cartel stability and cartel recidivism. The program leads to lower prices for three reasons. First, non-cooperators are more persistent in their behavior which effectively blocks cartel formation in their respective groups. Second, members of groups that do form a cartel defect more often thus reducing the average cartel lifetime. Third, the difference between the agreed-upon price and the undercutting price is larger. The leniency program does not however affect the probability that a dismantled cartel is re-established.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. 06-067/1

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Group Behavior ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Monopolization; Horizontal Anticompetitive Practices
• Subject: cartels ; corporate leniency programs ; Bertrand competition ; experiment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hinloopen, Jeroen ; Soetevent, Adriaan
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/86317