Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2006-08-01
Number: 06-067/1
Author-Name: Jeroen Hinloopen
Author-Email: j.hinloopen@uva.nl
Author-Workplace-Name: Faculty of Economics and Econometrics, Universiteit van Amsterdam
Author-Name: Adriaan Soetevent
Author-Email: a.r.soetevent@uva.nl
Author-Workplace-Name: Faculty of Economics and Econometrics, Universiteit van Amsterdam
Title: Trust and Recidivism; the Partial Success of Corporate Leniency Program in the Laboratory
Abstract: 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.
Classification-JEL: C92; D43; L41
Keywords: cartels; corporate leniency programs; Bertrand competition; experiment
File-Url: https://papers.tinbergen.nl/06067.pdf
File-Format: application/pdf
File-Size: 341866 bytes
Handle: RePEc:tin:wpaper:20060067