<scp>fines</scp>, <scp>leniency</scp>, and <scp>rewards</scp> in antitrust

TLDR

Antitrust. The study examines how fines, leniency, and rewards for whistleblowers influence cartel formation and pricing. Without leniency, fines reduce cartel formation but raise prices; leniency strengthens deterrence yet stabilizes surviving cartels; rewards lower prices to competitive levels; overall, well‑run leniency and reward schemes strongly deter cartels and may apply to other white‑collar crimes.

Abstract

This article reports results from an experiment studying how FINES, LENIENCY, and REWARDS for whistleblowers affect cartel formation and prices. Anti tr WITHOUT LENIENCY reduces cartel formation but increases cartel prices: subjects use costly FINES as punishments. LENIENCY improves antitrust by strengthening deterrence but stabilizes surviving cartels: subjects appear to anticipate the lower postconviction prices after reports/LENIENCY. With REWARDS, prices fall at the competitive level. Overall, our results suggest a strong cartel deterrence potential for well‐run LENIENCY and REWARD schemes. These findings may also be relevant for similar white‐collar organized crimes, such as corruption and fraud.