C14, F01,

The number of cartels detected in the United States and in Europe has increased considerably since the introduction of corporate leniency programs in antitrust legislation. It cannot, however, be ruled out that this apparent success results in part from increased cartel activity. We explore the effects of corporate leniency programs on pricing and cartel activity by use of an experiment. We find that in the lab (i) fewer cartels are established when a leniency program is in place, and (ii) cartels that do exist are less successful in charging prices above the static Nash equilibrium price and have lower survival rates. Copyright (c) 2008, RAND.

Analyzing the consequences of a finite reservation price in Hotelling's classic location model by using pure strategies in prices and lopations, we show that firms will never be further apart than half the length of the market and never closer together than one quarter if they cover the entire market (i,e. compete) at the symmetric equilibrium location. We would like to thank, without implicating, Dan Kovenock, Stephen Martin, Louis Phlips, Jacques Thisse, Bauke Visser and workshop participants at the European Univer sity Institute and the Tinbergen Institute for stimulating conversations and useful com ments and suggestions.

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