Leniency Programs For Multimarket Firms: The Effect Of Amnesty Plus On Cartel Formation

The authors examine the effect of the Amnesty Plus policy on the incentives of firms to engage in cartel activities. Amnesty Plus is aimed at attracting amnesty applications by encouraging firms, convicted in one market, to report their collusive agreements in other markets. It has been vigorously advertised that Amnesty Plus weakens cartel stability. They show to the contrary that Amnesty Plus may not have this desirable effect, and, if improperly designed, may even stabilize a cartel. They suggest a simple discount-setting rule to avoid this anticompetitive effect.