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Crime and punishment: When tougher antitrust enforcement leads to higher overcharge

Author

Listed:
  • Jensen, Sissel

    (Dept. of Economics, Norwegian School of Economics)

  • Kvaløy, Ola

    (UiS Business School, University of Stavanger)

  • Olsen, Trond E.

    (Dept. of Business and Management Science, Norwegian School of Economics)

  • Sørgard, Lars

    (Dept. of Economics, Norwegian School of Economics)

Abstract

The economics of crime and punishment postulates that higher punishment leads to lower crime levels, or less severe crime. It is however hard to get empirical support for this rather intuitive relationship. This paper offers a model that can contribute to explain why this is the case. We show that if criminals can spend resources to reduce the probability of being detected, then a higher general punishment level can increase the crime level. In the context of antitrust enforcement, the model shows that competition authorities who attempt to fight cartels by means of tougher sanctions for all offenders may actually lead cartels to increase their overcharge when leniency programs are in place.

Suggested Citation

  • Jensen, Sissel & Kvaløy, Ola & Olsen, Trond E. & Sørgard, Lars, 2013. "Crime and punishment: When tougher antitrust enforcement leads to higher overcharge," Discussion Papers 2013/5, Norwegian School of Economics, Department of Business and Management Science.
    • Handle: RePEc:hhs:nhhfms:2013_005
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Antitrust enforcement; leniency programs; economics of crime;
    All these keywords.

    JEL classification:

    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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