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Effects of Hostility Tradition in Antitrust: Leniency Programs and Cooperation Agreements

By  |  April 21, 2014

Posted by Social Science Research Network

Effects of Hostility Tradition in Antitrust: Leniency Programs and Cooperation Agreements – Natalia Pavlova (National Research University Higher School of Economics) and Andrey E Shastitko (Lomonossov Moscow State University ; Russian Presidential Academy of National Economy and Public Administration)

ABSTRACT: The article focuses on the effects that type I errors can have on the incentives of firms to compete, collude or engage in efficiency promoting socially beneficial cooperation. Our results confirm that in the presence of type I errors the introduction of a leniency program can have ambiguous effects, including the destruction and prevention of welfare enhancing horizontal cooperation agreements. The obtained results help understand the negative impact the hostility tradition resulting in type I enforcement errors can have on social welfare when applied to the regulation of horizontal agreements.