Abstract
We analyze maximal cartel prices in inflnitely-repeated oligopoly models under leniency where flnes are linked to illegal gains, as often outlined in existing antitrust regulation, and detection probabilities depend on the degree of collusion. We introduce cartel culture that describes how likely cartels persist after each conviction. Our analysis disentangles the efiects of traditional antitrust regulation, leniency, and cartel strategies. Without rewards to the strictly-flrst reporter, leniency cannot reduce maximal cartel prices below those under traditional regulation. Moreover, in order to avoid adverse efiects flne reductions should be moderate in case of multiple reporters. Our results extend the current literature and partially support existing leniency programs.
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