Antitrust Auditing, Commitment and Leniency Program: A Laboratory Evidence

Abstract

Using an experiment, we study the effects of leniency programs on cartel deterrence, stability, duration and price behavior, when the antitrust authority has the possibility to decide upon the probability of investigation and offers only partial immunity from sanctions to a whistle-blower. For a repeated Bertrand pricing game, we find that the introduction of a leniency program causes fewer cartels to form, though cooperation in these cartels is more successful in charging prices above the static Nash equilibrium price and they can have a longer duration. Our results are, in general, in line with those experimental papers that have leniency programs with full immunity.