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'Vertical Relations in Cartel Theory', September 2011

In his dissertation 'Vertical Relations in Cartel Theory', Martijn Han (1980) studies how hierarchical (vertical) relations with superiors can incentivize managers to form a cartel. In particular, Han researches the economic incentives of compliance programs, which are internal measures within firms to monitor managerial behavior with regard to corporate crime. Han argues that some adaptations to Dutch and European competition policy can be effective in the fight against cartels: “When managers would be individually prosecuted for competition law infringements, while receiving immunity from prosecution only if they report the cartel themselves to the authority, then the implementation of a compliance program can incentivize both managers and their superiors to report the cartel. We coin this the vertical-race-to-the-courthouse effect.”