Marker Systems in Leniency Policies

Leniency Programs (LPs) reward cartel-participating firms that come forward with evidence that can be used as proof of the illegal conduct in which they have participated. The marker system allows a leniency applicant to reserve its position in the reporting queue before the names of the eligible applicants are announced. We show that markers can reduce the destabilizing effect of LPs: When cartels are established either with or without a marker system, self-reporting and cartel disruption are less likely with markers, as compared to without markers. In addition, the introduction of markers in LPs may further the sustainability of collusion.