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Leniency Policies and Illegal Transactions

By Paolo Buccirossi and Giancarlo Spagnolo

Abstract

Forthcoming in the Journal of Public Economics. We study the consequences of leniency – reduced legal sanctions for wrongdoers who spontaneously self-report to law enforcers – on sequential, bilateral, illegal transactions, such as corruption, manager-auditor collusion, or drug deals. It is known that leniency helps deterring illegal relationships sustained by repeated interaction. Here we find that - when not properly designed - leniency may simultaneously provide an effective governance mechanism for occasional sequential illegal transactions that would not be feasible in its absence.

Topics: Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems, C2 - Intellektuelles Eigentum, Aneignung von Innovationserträgen und Innovationswettbewerb, C6 - Kommunikations- und Transporttechnologien, Industrie- und Regionalstruktur, ddc:330
Year: 2005
DOI identifier: 10.1016/j.jpubeco.2005.09.008
OAI identifier: oai:epub.ub.uni-muenchen.de:13477
Provided by: Open Access LMU

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