LAW AND ECONOMY: CARTELS - SANCTIONS - LENIENCY - EXCLUSION

An experimental study of anti-cartel schemes

This article proposes an experimental study of the effectiveness of anti-cartel schemes. Cartels result from the decision to engage in anti-competitive price-fixing conspiracies. The experiments compare the propensities to form cartels in monetary sanctions schemes, leniency schemes, compliance schemes and exclusion schemes. The study evaluates the impact of the types of sanctions, the levels of sanctions and different probabilities of detection. It also identifies the effect of certain individual characteristics, including gender and risk aversion. The results show that exclusion and compliance are the most effective tools to deter the formation of cartels. The level and the probabilities of sanctions have the expected effects but in a non-linear fashion. Leniency reinforces the efficacy of sanctions. Finally, gender and risk aversion influence the propensity to choose the decision to form a cartel. The implications for the regulator and firms are important: they include identifying how to better deter these illicit practices.

*This article is an automatic translation of the original article in French, provided here for your convenience. Read the original article. Introduction 1. Following the work of Gary Becker (1968), the economics of crime was the main framework for analyzing cartel practices. These consist of illicit agreements between several firms, frequently through their managers, and are most often based on agreements to charge higher prices than those that would have prevailed in free competition [1]. According to the Bekkerian approach, a firm has an incentive to engage in a collusive practice when the illicit gain resulting from the practice exceeds its expected cost, which is equal to the penalty multiplied by the probability of detection. 2. The legal literature focuses on the choice of

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Constance Monnier-Schlumberger, Béatrice Boulu-Reshef, An experimental study of anti-cartel schemes, November 2018, Concurrences N° 4-2018, Art. N° 88127, pp. 74-82

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