Professor Jeong Yeol Kim published “The Impact of Dual-Agency Leniency Policy on Cartel Detection” in the Asian Journal of Law and Economics with Professor Daeyoung Jeong of Yonsei University. Set against Korea’s dual-agency enforcement setting, where the Korea Fair Trade Commission and the Supreme Prosecutors’ Office operate separate leniency programs within the same jurisdiction, the paper develops an infinitely repeated triopoly model to analyze how independent operation and inter-agency cooperation affect cartel detection. The paper shows that when the two authorities do not recognize each other’s leniency markers, firms may have weaker incentives to apply for leniency because self-reporting does not eliminate residual liability before the other authority. By contrast, cooperation through rank recognition restores the “race to the courthouse” mechanism and lowers the self-reporting threshold. The paper further shows that cooperation is most effective when the reduction structure for first-in and subsequent applicants is symmetric across the two authorities, whereas under the asymmetric reduction structure that reflects the current institutional setting, stronger criminal sanctions can weaken self-reporting incentives. Overall, the paper provides an economic theory model that identifies inefficiencies arising from conflicts between enforcement authorities in real-world institutional settings and offers policy implications for improving dual-agency leniency design.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6113088