77 research outputs found

    Leniency Policies and Illegal Transactions

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    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

    Leniency Policies and Illegal Transactions

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    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.amnesty; corruption; collusion; financial fraud; governance; hold up; hostages; illegal trade; immunity; law enforcement; leniency; organized crime; self-reporting; whistleblowers

    The Effects of Leniency on Illegal Transactions: How (Not) to Fight Corruption

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    We study the consequences of 'leniency' - reduced legal sanctions for wrongdoers who spontaneously self-report to law enforcers - on corruption, drug dealing, and other forms of sequential, bilateral, illegal trade. We find that when not properly designed, leniency may be highly counterproductive. In reality leniency is typically "moderate," in the sense of only reducing, or at best cancelling the sanctions for the self-reporting party. Moderate leniency may greatly facilitate the enforcement of long-term illegal trade relations, and may even provide an effective enforcement mechanism for occasional (one-shot) illegal transactions, which would not be enforceable otherwise.Law enforcement; Self-reporting; Corruption; Crime; Illegal trade; Drug dealing.

    Deterrence in Competition Law

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    This paper provides a comprehensive discussion of the deterrence properties of a competition policy regime. On the basis of the economic theory of law enforcement we identify several factors that are likely to affect its degree of deterrence: 1) sanctions and damages; 2) financial and human resources; 3) powers during the investigation; 4) quality of the law; 5) independence; and 6) separation of power. We then discuss how to measure deterrence. We review the literature that use surveys to solicit direct information on changes in the behavior of firms due to the threats posed by the enforcement of antitrust rules, and the literature based on the analysis of hard data. We finally argue that the most challenging task, both theoretically and empirically, is how to distinguish between “good” deterrence and “bad” deterrence

    Measuring the deterrence properties of competition policy: the Competition Policy Indexes

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    The aim of this paper is to describe in detail a set of newly developed indicators of the quality of competition policy, Competition Policy Indexes, or CPIs. The CPIs measure the deterrence properties of a competition policy in a jurisdiction, where for competition policy we mean the antitrust legislation, including the merger control provisions, and its enforcement. The CPIs incorporate data on how the key features of a competition policy regime score against a benchmark of generally-agreed best practices and summarise them so as to allow cross-country and cross-time comparisons. The CPIs have been calculated for a sample of 13 OECD jurisdictions over the period 1995-2005

    Competition Policy and Productivity Growth: An Empirical Assessment

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    This paper empirically investigates the effectiveness of competition policy by estimating its impact on Total Factor Productivity (TFP) growth for 22 industries in 12 OECD countries over the period 1995-2005. We ?nd a robust positive and signi?cant effect of competition policy asmeasured by newly created indexes. We provide several arguments and results based on instrumental variables estimators as well as non-linearities to support the claim that the established link can be interpreted in a causal way. At a disaggregated level, the effect on TFP growth is particularly strong for speci?c aspects of competition policy related to its institutional setup and antitrust activities (rather than merger control). The effect is strengthened by good legal systems, suggesting complementarities between competition policy and the ef?ciency of law enforcement institutions

    Parallelismo e collusione

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    Abstract Antitrust authorities often consider parallelism of firms' strategies and market share stability as clues of illegal collusion in the form of concerted practices. In this paper I show that this inference may be contrary to some theoretical results. I develop a model of price competition with differentiated products in which demand and costs vary over time. If the market is perturbed by shocks on the supply or on the demand side which are common to all firms, then price parallelism will occur both in a competitive and in a collusive equilibrium and cannot signal which one occurred. If shocks are firm specific, price parallelism connotes a competitive market. The paper also shows that the competitive equilibrium is characterized by a higher market share stability than a collusive equilibrium

    Deterrence in Competition Law

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    This paper provides a comprehensive discussion of the deterrence properties of a competition policy regime. On the basis of the economic theory of law enforcement we identify several factors that are likely to affect its degree of deterrence: 1) sanctions and damages; 2) financial and human resources; 3) powers during the investigation; 4) quality of the law; 5) independence and 6) separation of power. We then discuss how to measure deterrence. We review the literature that uses surveys to solicit direct information on changes in the behavior of firms due to the threats posed by the enforcement of antitrust rules, and the literature based on the analysis of hard data. We finally argue that the most challenging task, both theoretically and empirically, is how to distinguish between “good” deterrence and “bad” deterrence. ZUSAMMENFASSUNG - (Abschreckung im Wettbewerbsrecht) Dieser Beitrag bietet eine umfassende Diskussion über die Abschreckungseigenschaften eines wettbewerbspolitischen Systems. Auf der Grundlage der ökonomischen Theorie der Rechtsdurchsetzung werden mehrere Faktoren identifizier, welche den Abschreckungsgrad des Systems am ehesten beeinflussen können. Diese sind: 1) Sanktionen und Schadensersatzforderungen, 2) finanzielle Ressourcen und Personal der Wettbewerbsbehörde, 3) die Befugnisse der wettbewerbspolitischen Autorität im Rahmen der Untersuchung, 4) die Qualität des Rechtsrahmens, 5) die Unabhängigkeit der Behörde und 6) die Gewaltenteilung. Anschließend wird diskutiert, wie man den Abschreckungsgrad eines wettbewerbspolitischen Systems empirisch messen kann. Zuerst wird die Literatur besprochen, die auf Befragungen beruht. Die Befragungen sollten Aufschluss darüber geben, wie sich das Unternehmensverhalten angesichts der Durchsetzung von wettbewerbspolitischen Maßnahmen ändert. Dem gegenüber wird die Literatur dargestellt, die "harte" Daten nutzt. Schließlich wird argumentiert, dass die anspruchsvollste Aufgabe sowohl theoretisch als auch empirisch darin bestehen wird, zwischen "guter" und "schlechter" Abschreckung durch Wettbewerbspolitik zu unterscheiden.Competition Policy, Law Enforcement, Deterrence

    Deterrence in Competition Law

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    This paper provides a comprehensive discussion of the deterrence properties of a competition policy regime. On the basis of the economic theory of law enforcement we identify several factors that are likely to affect its degree of deterrence: 1) sanctions and damages; 2) financial and human resources; 3) powers during the investigation; 4) quality of the law; 5) independence; and 6) separation of power. We then discuss how to measure deterrence. We review the literature that use surveys to solicit direct information on changes in the behavior of firms due to the threats posed by the enforcement of antitrust rules, and the literature based on the analysis of hard data. We finally argue that the most challenging task, both theoretically and empirically, is how to distinguish between “good†deterrence and “bad†deterrence.Competition Policy; Law Enforcement; Deterrence

    Competition policy and productivity growth: An empirical assessment

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    This paper empirically investigates the effectiveness of competition policy by estimating its impact on Total Factor Productivity (TFP) growth for 22 industries in 12 OECD countries over the period 1995-2005. We find a robust positive and significant effect of competition policy as measured by newly created indexes. We provide several arguments and results based on instrumental variables estimators and non-linearities to support the claim that the established link can be interpreted in a causal way. At a disaggregated level, the effect on TFP growth is particularly strong for specific aspects of competition policy related to its institutional set up and antitrust activities (rather than merger control). The effect is strengthened by good legal systems, suggesting complementarities between competition policy and the efficiency of law enforcement institutions. --Competition Policy,Productivity Growth,TFP,Institutions,Deterrence,OECD
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