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Crime and punishment: When tougher antitrust enforcement leads to higher overcharge

Jensen, Sissel; Kvaløy, Ola; Olsen, Trond E.; Sørgard, Lars
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URI
http://hdl.handle.net/11250/227221
Date
2013-05
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  • Discussion papers (FOR) [556]
Abstract
The economics of crime and punishment postulates that higher

punishment leads to lower crime levels, or less severe crime. It is how-

ever hard to get empirical support for this rather intuitive relationship.

This paper offers a model that can contribute to explain why this is

the case. We show that if criminals can spend resources to reduce the

probability of being detected, then a higher general punishment level

can increase the crime level. In the context of antitrust enforcement,

the model shows that competition authorities who attempt to fight

cartels by means of tougher sanctions for all o¤enders may actually

lead cartels to increase their overcharge when leniency programs are

in place.
Publisher
FOR
Series
Discussion paper;05/13

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