Bourjade, Sylvain and Rey, Patrick and seabright, paul (2009): Private antitrust enforcement in the presence of pre-trial bargaining. Published in: The Journal of Industrial Economics , Vol. LVII, No. 3 (September 2009): pp. 372-409.
Download (291kB) | Preview
We study the effect of encouraging private actions for breaches of competition law. We develop a model in which a plaintiff, who may have private information about whether a breach of law has been committed, decides whether to open a case against a defendant. If opened, the case may be settled out of court or may proceed to full trial. The authorities can facilitate private actions by lowering the costs of opening a case or of proceeding to a full trial, or by raising the damages to be expected in the event of success. We show that facilitating private action increases the number of cases opened and sometimes but not always makes plaintiffs more aggressive in pre-trial bargaining. The latter, if it occurs, tends to make defendants who have committed anti-trust violations more likely to settle than innocent defendants. We also show that for screening to work requires the Court to be committed to rely only on submitted evidence in the case, and not on other possibly relevant background material. We finally study how to design the rules so as to enhance the role of private litigation on antitrust enforcement and prove that it is better to increase damages that to reduce costs of initiating a suit. In particular we find large benefits from introducing a system of compensation for Defendants found non-liable, paid by unsuccessful plaintiffs.
|Item Type:||MPRA Paper|
|Original Title:||Private antitrust enforcement in the presence of pre-trial bargaining|
|Keywords:||litigation, private actions, out-of-court settlement, enforcement|
|Subjects:||K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law
K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K41 - Litigation Process
L - Industrial Organization > L4 - Antitrust Issues and Policies > L40 - General
|Depositing User:||Sylvain Bourjade|
|Date Deposited:||18 Nov 2011 15:28|
|Last Modified:||11 Oct 2016 16:06|
Baker S. and Mezzetti C., 2001. "Prosecutorial resources, plea bargaining and the decision to go to trial," Journal of Law, Economics & Organization, 17:149-167.
Bebchuk L., 1984. "Litigation and Settlement under Imperfect Information," Rand Journal of Economics, 15:404-415.
Becker G. and Stigler G., 1974. "Law enforcement, Malfeasance and Compensation of Enforcers," Journal of Legal Studies, 3:1-18.
Besanko D. and Spulber D.F., 1990. "Are Treble Damages Neutral? Sequential Equilibrium and Private Antitrust Enforcement," American Economic Review, 80:870-887.
Breit W. and Elzinga K.G., 1974, 1985. "Antitrust Enforcement and Economic Efficiency: The Uneasy Case for Treble Damages," Journal of Law and Economics, 17:329-356.
Briggs H.C., Huryn, K.D., and McBride M.E., 1996. "Treble Damages and the Incentive to Sue and Settle," RAND Journal of Economics, 27:770-786.
Cho I.-K. and Kreps D. M, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, MIT Press, 102(2):179-221.
Daughety, A.F., 2000. "Settlement," In B. Bouckaert and G. De Geest, eds., Encyclopedia of Law and Economics, 5: Edward Elgar Publishing Co.
Daughety, A. F. and Reinganum J. F., 1995. "Keeping society in the dark: on the admissibility of pretrial negotiations as evidence in court," Rand Journal of Economics, 26(2):203-221.
Daughety A. F. and Reinganum J. F., 2000a. "On the economics of trials: adversarial process, evidence, and equilibrium bias," Journal of Law, Economics and Organization, 16:365-395.
Daughety A. F. and Reinganum J. F., 2000b. "Appealing judgments," Rand Journal of Economics, 31:502-526.
Daughety A. F. and Reinganum J. F., 2005. "Economic Theories of Settlement Bargaining," Annual Review of Law and Social Sciences 1:35-59.
Daughety A. F. and Reinganum J. F., 2008. "Settlement," To appear in the Encyclopedia of Law and Economics (Second Ed.), 10: Procedural Law and Economics, Ed. by Chris William Sanchirico. Published by Edward Elgar, forthcoming.
Demougin D. and Fluet C., 2006. "Preponderance of evidence," European Economic Review, 50:963-976.
Demougin D. and Fluet C., 2008. "Rules of proof, courts, and incentives," Rand Journal of Economics, 39(1):20-40.
Friedman, E. and Wickelgren A., 2006. "Bayesian Juries and The Limits to Deterrence," Journal of Law, Economics, and Organization, 22(1):70-86.
Gould, J., 1973. "The Economics of Legal Conflicts," Journal of Legal Studies, 2:279-300.
Grossman G. M. and Katz M. L., 1983. "Plea Bargaining and Social Welfare," American Economic Review, 73:749-757.
Katz, A.W., 1990. "The effect of frivolous lawsuits on the settlement of litigation," International Review of Law and Economics, 10:3-27.
Landes, W., 1971. "An Economic Analysis of the Courts," Journal of Law and Economics, 14:61-187.
McAfee R. P., Mialon H. M., and Mialon, S. H., 2008. "Private v. Public Antitrust Enforcement: A Strategic Analysis," Journal of Public Economics, 92:1863-1875.
Martini G., 2004. "Antitrust Policy and Price Collusion: Public Agencies vs Delegation," Louvain Economic Review, 70:127-151.
Nalebuff, B., 1987. "Credible Pretrial Negotiation," Rand Journal of Economics, 18:198-210.
Ordover, Y., and Rubinstein A.,1986. "A Sequential Concession Game with Asymmetric Information," Quarterly Journal of Economics, 101(4):879-888.
Png, I., 1983. "Strategic Behavior in Suit, Settlement, and Trial," Bell Journal of Economics, 14:539-550.
Polinsky A.M. and Che Y-K., 1991. "Decoupling Liability: Optimal incentives for Care and Litigation," Rand Journal of Economics, 22:562-570.
Polinsky A.M. and Rubinfeld D. L., 1996. "Optimal awards and penalties when the probability of prevailing varies among plaintiffs," RAND Journal of Economics, 27:269-280.
Posner, R., 1972. "An Economic Approach to Legal Procedure and Judicial Administration," Journal of Legal Studies, 2:399-458.
Reinganum J., 1988. "Plea Bargaining and Prosecutorial Discretion," American Economic Review, 78:713-728.
Reinganum J. and Wilde L., 1986. "Settlement, Litigation, and the Allocation of Litigation Costs," Rand Journal of Economics, 17:557-568.
Salant S.W., 1987. "Treble damages Awards in Private Lawsuits for Price Fixing," The Journal of Political Economy, 95:1326-1336.
Schrag J., and Scotchmer S., 1994. "Crime and Prejudice: The Use of Character Evidence in Criminal Trials," Journal of Law, Economics and Organizations, 10(2):319-342.
Shavell, S., 1982. "Suit, settlement and trial: A theoretical analysis under alternative methods for the allocation of legal costs," Journal of Legal Studies, 11:55-82.
Shavell S., 1984. "Liability for Harm Versus Regulation of Safety," Journal of Legal Studies, 13:357-374.
Spier, K., 1997. "A Note on the Divergence between the Private and the Social Motive to Settle under a Negligence Rule," Journal of Legal Studies, XXVI:613-621.
Spier K., 2007. "Litigation," Handbook of Law and Economics, A.M. Polinsky & S. Shavell eds.
Walbroeck, D., D. Slater and G. Even-Shoshan. "Study on the conditions of claims for damages in the case of infringement of EC competition rules," Brussels, Ashurst.
Wickelgren, A., 2004. "A Model of Welfare-Reducing Settlement," Contributions to Economic Analysis & Policy, 3(1):Art.4.