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

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http://hdl.handle.net/11250/227221Utgivelsesdato
2013-05Metadata
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Sammendrag
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.