Law and economics

Microeconomics

Enforcement

Economics

Set (abstract data type)

Computer science

Visual arts

Collusion

Law enforcement

Deterrence theory

Political science

Cartel

Deterrence (psychology)

Programming language

Cornerstone

American Economic Review

The cornerstone of cartel enforcement in the United States and elsewhere is a commitment to the lenient prosecution of early confessors. A burgeoning game-theoretical literature is ambiguous regarding the impacts of leniency. I develop a theoretical model of cartel behavior that provides empirical predictions and moment conditions, and apply the model to the complete set of indictments and information reports issued over a 20-year span. Statistical tests are consistent with the notion that leniency enhances deterrence and detection capabilities. The results have implications for market efficiency and enforcement efforts against cartels and other forms of organized crime. (JEL D43, L12, L13, K21)

Strategic Leniency and Cartel Enforcement