Language: 日本語 English

Group Size Effects on Cartel Formation and Enforcement Power of Leniency Programs

Yasuyo Hamaguchi, Toshiji Kawagoe and Aiko Shibata
Sat, 2007-09-01

Antitrust authorities of many countries have been trying to establish appropriate competition policies based on economic analysis. Recently an anti-cartel policy called a "leniency program" has been introduced in many countries as an effective policy to dissolve cartels. In this paper, we studied several kinds of leniency programs through laboratory experiments. We experimentally controlled for three factors: 1) cartel size: the number of cartel members in a group, small (two-person) or large (seven-person), 2) fine schedule: the number of firms that are given reduced fines, and 3) type of immunity: a reduced fine is given to self-reporting firm, or a reward is given to self-reporting firm. The experimental results showed that (1) an increase in the number of cartel members in a group increased the number of cartels dissolved, (2) changing the fine schedule had no significant effect both in the two-player case and in the seven-player case, and (3) positive enforcement such as giving a reward for a self-reporting firm in a courageous leniency program has great impact on dissolving cartel activities.