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Divide et Impera: Optimal Deterrence Mechanisms Against Cartels and Organized Crime

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  • Spagnolo, Giancarlo

Abstract

Leniency programmes reduce sanctions for law violators that self-report. We focus on their ability to deter cartels and organized crime by increasing incentives to ?cheat? on partners. Optimally designed ?courageous? leniency programmes reward the first party that reports with the fines paid by all other parties and achieve the first best: complete and costless deterrence. ?Moderate? leniency programs that only reduce or cancel sanctions may deter organized crime (a) by protecting an agent that defects from fines and from other agents? punishment; and (b) by increasing the riskiness of crime/collusion, in the sense of Harsanyi and Selten (1988).

Suggested Citation

  • Spagnolo, Giancarlo, 2003. "Divide et Impera: Optimal Deterrence Mechanisms Against Cartels and Organized Crime," CEPR Discussion Papers 3991, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3991
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    More about this item

    Keywords

    Antitrust; Cartels; Collusion; Competition policy; Crime deterrence; Law enforcement; Leniency; Organized crime; Risk dominance; Self-reporting;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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