Corporate Leniency in a Dynamic World: The Preemptive Push of an Uncertain Future
Journal
Journal of Industrial Economics
Type
forthcoming
Author(s)
Abstract
This paper investigates how leniency programs induce collusive
offenders to self report in a dynamic setting, where the risk of
independent detection evolves stochastically over time. We show
how uncertainty about the future can push firms into preemptive
application, and how these preemptive incentives can unravel to
the point where firms apply long before the risk of detection is
in any way imminent. For policy, the analysis suggests that a
relatively harsh treatment of latecomers may be more important
than offering high absolute reductions or even rewards, and that
leniency should be available to firms who are already under investigation.
offenders to self report in a dynamic setting, where the risk of
independent detection evolves stochastically over time. We show
how uncertainty about the future can push firms into preemptive
application, and how these preemptive incentives can unravel to
the point where firms apply long before the risk of detection is
in any way imminent. For policy, the analysis suggests that a
relatively harsh treatment of latecomers may be more important
than offering high absolute reductions or even rewards, and that
leniency should be available to firms who are already under investigation.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Quantitative Economic Methods
Refereed
Yes
Subject(s)
Eprints ID
263040