I present a simple model of collusion in which the competition authority offers leniency rates contingent on the number of firms that report information. The optimal leniency policy involves what I refer to as a single informant rule - that is, leniency should be given only when a single firm reports information. The single informant rule allows to increase expected sanctions compared to the first informant rule, which overall improves cartel deterrence.
Are leniency programs too generous?
SAUVAGNAT, JULIEN
2014
Abstract
I present a simple model of collusion in which the competition authority offers leniency rates contingent on the number of firms that report information. The optimal leniency policy involves what I refer to as a single informant rule - that is, leniency should be given only when a single firm reports information. The single informant rule allows to increase expected sanctions compared to the first informant rule, which overall improves cartel deterrence.
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