Scandinavian Working Papers in Economics
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Department of Economics, Norwegian School of Economics (NHH) Discussion Paper Series in Economics, Department of Economics, Norwegian School of Economics (NHH)

No 4/2013:
Crime and punishment: When tougher antitrust enforcement leads to higher overcharge.

Sissel Jensen (), Ola Kvaløy (), Trond E. Olsen () and Lars Sorgard ()

Abstract: The economics of crime and punishment postulates that higher punishment leads to lower crime levels, or less severe crime. It is however hard to get empirical support for this intuitive relationship. This paper o¤ers a model that contributes 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, it is shown that competition authorities who attempt to …ght cartels by means of tougher sanctions for all o¤enders may actually lead cartels to increase their overcharge when leniency programs are in place.

Keywords: antitrust enforcement; leniency programs; economics of crime.; (follow links to similar papers)

JEL-Codes: K21; (follow links to similar papers)

32 pages, February 18, 2013

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