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/lp/american-economic-association/strategic-leniency-and-cartel-enforcement-0EOkW8HRBF
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- Publisher
- American Economic Association
- Copyright
- Copyright © 2009 by the American Economic Association
- Subject
- Articles
- ISSN
- 0002-8282
- DOI
- 10.1257/aer.99.3.750
- Publisher site
- See Article on Publisher Site
Abstract
The cornerstone of cartel enforcement in the United States and elsewhere is a commitment to the lenient prosecution of early confessors. A burgeoning game-theoretical literature is ambiguous regarding the impacts of leniency. I develop a theoretical model of cartel behavior that provides empirical predictions and moment conditions, and apply the model to the complete set of indictments and information reports issued over a 20-year span. Statistical tests are consistent with the notion that leniency enhances deterrence and detection capabilities. The results have implications for market efficiency and enforcement efforts against cartels and other forms of organized crime. (JEL D43 , L12 , L13 , K21 )
Journal
American Economic Review – American Economic Association
Published: Jun 1, 2009