publication . Article . Preprint . Other literature type . Research . 2011

Evaluating Leniency with Missing Information on Undetected Cartels: Exploring Time-Varying Policy Impacts on Cartel Duration

Jun Zhou;
Open Access
  • Published: 01 Nov 2011 Journal: SSRN Electronic Journal (eissn: 1556-5068, Copyright policy)
  • Publisher: Elsevier BV
  • Country: Germany
Abstract
This paper examines the effects of European Commission’s (EC) new leniency program on the EC’s capabilities in detecting and deterring cartels. As a supplementary analysis, the US leniency is studied. 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. Contrary to earlier studies, my statistical tests are consistent with the theoretic predict...
Subjects
free text keywords: 330, Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems, A5 - Unvollständige Vertragsbeziehungen und die Gestaltung von Residualrechten, Wettbewerbspolitik, Kartell, Straffreiheit, Dauer, Theorie, Schätzung, EU-Staaten, ddc:330, Actuarial science, Selection bias, media_common.quotation_subject, media_common, Short run, Econometrics, Comparative statics, Cartel, Statistical hypothesis testing, Economics, Enforcement, Average duration
18 references, page 1 of 2

Figure 1. Semi-Annual Average Duration of The EC's Detected Cartels Notes: The figure plots the semi-annual average log-transformed durations of 126 cartels decided by the EC, the Court of First Instance (CFI) and the European Court of Justice (ECJ) between December 18, 1985 to December 7, 2011 and dissolved within each six-month period from June 6, 1989 to October 17, 2007. The vertical bar marks the introduction of the new leniency program on February 19, 2002. 10 15 20 Years elapsed from cartel initiation Table 5. Robustness Checks (Suspected duration; DOJ's influence; anticipation effect; time-varying duration elasticities)

Log(DURATION-2) Log(DURATION) Specification (4) (5) (6)

EU Sample-2a EU Sample-3b EU Sample

(7) Pre-Leniency EU Sample

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