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Evaluating the effectiveness of the Brazilian Leniency Program

Author

Listed:
  • Lucas Campio Pinha

    (Federal Rural University of Rio de Janeiro)

  • Marcelo José Braga

    (Federal University of Viçosa)

Abstract

This paper sets out to verify if the Brazilian Leniency Program is effective in fighting cartels. The literature has already confirmed the effectiveness of leniency programs in the United States and European Union, but little is known about their effects in emerging countries. A theoretical model provides the long-term prediction of the implementation of an effective leniency program: the average hazard of cartel dissolution increases in the long-run when compared to the short-run. A competing risk model for cartels judged between 1996 and 2017 was estimated, allowing the cartel to end naturally or through antitrust intervention. It was found that the Brazilian Leniency Program is effective in increasing the hazard of cartel dissolution in the long-run, thereby confirming that this policy is effective in destabilizing cartels in Brazil. As fighting cartels is a major concern in Brazil and worldwide, an understanding of the effects of leniency programs is crucial to promoting a competitive environment and preventing anticompetitive activities.

Suggested Citation

  • Lucas Campio Pinha & Marcelo José Braga, 2019. "Evaluating the effectiveness of the Brazilian Leniency Program," Economics Bulletin, AccessEcon, vol. 39(3), pages 1860-1869.
    • Handle: RePEc:ebl:ecbull:eb-18-00938
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2019/Volume39/EB-19-V39-I3-P174.pdf
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    References listed on IDEAS

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    3. Rotemberg, Julio J & Saloner, Garth, 1986. "A Supergame-Theoretic Model of Price Wars during Booms," American Economic Review, American Economic Association, vol. 76(3), pages 390-407, June.
    4. Yun Jeong Choi & Kyoung Soo Hahn, 2014. "How Does A Corporate Leniency Program Affect Cartel Stability? Empirical Evidence From Korea," Journal of Competition Law and Economics, Oxford University Press, vol. 10(4), pages 883-907.
    5. Brenner, Steffen, 2009. "An empirical study of the European corporate leniency program," International Journal of Industrial Organization, Elsevier, vol. 27(6), pages 639-645, November.
    6. Margaret C. Levenstein & Valerie Y. Suslow, 2011. "Breaking Up Is Hard to Do: Determinants of Cartel Duration," Journal of Law and Economics, University of Chicago Press, vol. 54(2), pages 455-492.
    7. Joseph E. Harrington, 2008. "Optimal Corporate Leniency Programs," Journal of Industrial Economics, Wiley Blackwell, vol. 56(2), pages 215-246, June.
    8. Nathan H. Miller, 2009. "Strategic Leniency and Cartel Enforcement," American Economic Review, American Economic Association, vol. 99(3), pages 750-768, June.
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    Cited by:

    1. Silveira, Douglas & Vasconcelos, Silvinha & Resende, Marcelo & Cajueiro, Daniel O., 2022. "Won’t Get Fooled Again: A supervised machine learning approach for screening gasoline cartels," Energy Economics, Elsevier, vol. 105(C).

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    More about this item

    Keywords

    Brazilian Leniency Program; antitrust; cartels; hazard of cartel dissolution;
    All these keywords.

    JEL classification:

    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • K2 - Law and Economics - - Regulation and Business Law

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