Big Data

Optimal Leniency Programs In Antitrust

Date Added: Oct 2010
Format: PDF

This paper analyses the incentive structure underlying the adoption of leniency programs in antitrust enforcement. The enforcement of competition law is treated as the delegation of the economic activity from the government to private firms. The model contributes to the debate over desirability of granting leniency to more than one cartelists. For this purpose, the author introduces a probability of conviction that depends on authority-specific characteristics. This results in the optimal number of leniencies being specific to national authorities and market structures. The model confirms a result widely acknowledged in the antitrust literature: a program that merely reduces sanctions to the first reporter is ineffective.