Evaluating Leniency and Modeling Cartel Durations: Time-Varying Policy Impacts and Sample Selection

J. Zhou

Research output: Working paperDiscussion paperOther research output

Abstract

This paper examines the effects of the European Commission’s (EC) new leniency program on the EC’s capabilities in detecting and deterring cartels. I discuss a dynamic model of cartel formation and dissolution to illustrate how changes in antitrust policies and economic conditions might affect cartel duration. Comparative statics results are then corroborated with empirical estimates of hazard functions adjusted to account for both the heterogeneity of cartels and the time-varying policy impacts suggested by theory. Statistical tests are consistent with the theoretic predictions that following an efficacious leniency program, the average duration of discovered cartels rises in the short run and falls in the long run.
Original languageEnglish
Place of PublicationTilburg
PublisherTILEC
Volume2011-042
Publication statusPublished - 2011

Publication series

NameTILEC Discussion Paper
Volume2011-042

Keywords

  • evaluation of antitrust policies
  • leniency
  • time-varying policy effects
  • sample selection bias

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