Massimo Motta and Michele Polo

"Leniency programs and cartel prosecution"
JEL codes:

Abstract: We study the enforcement of competition policy against collusion under Leniency Programs, which give reduced fines to firms which reveal information to the Antitrust Authority. Leniency Programs make enforcement more effective but they may also induce collusion, since they decrease the expected cost of misbehaviour. We show that in the optimal policy the former effect dominates, calling for Leniency Programs when the Antitrust Authority has limited resources. We also show that these Programs should apply to firms that reveal information even after an investigation is started.

Pre-publication pdf copy.