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Treble Damages and the Incentive to Sue and Settle

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  • Hugh C. Briggs III
  • Kathleen D. Huryn
  • Mark E. McBride

Abstract

We apply Png's (1983) model to antitrust suits to determine the effects of private suits on government suits and vice versa. In equilibrium, a defendant can probabilistically signal a strong case by not offering to settle. A violator's incentive to signal a strong case to deter a treble damage suit forces the government to pursue more trials than it would otherwise. Private plaintiffs are more likely to settle following a government suit than otherwise, but they win a trial with the same probability regardless of whether there was a previous government suit. Data on private suits support the latter two contentions.

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Bibliographic Info

Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 27 (1996)
Issue (Month): 4 (Winter)
Pages: 770-786

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Handle: RePEc:rje:randje:v:27:y:1996:i:winter:p:770-786

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Cited by:
  1. Schinkel, M.P. & Tuinstra, J., 2004. "Imperfect Competition Law Enforcement," CeNDEF Working Papers, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance 04-07, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
  2. Rüggeberg, J. & Schinkel, M.P. & Tuinstra, J., 2005. "Illinois Walls: How barring indirect purchaser suits facilitates collusion," CeNDEF Working Papers, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance 05-10, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
  3. Tim Reuter, 2012. "Private antitrust enforcement revisited: The role of private incentives to report evidence to the antitrust authority," Working Paper Series of the Department of Economics, University of Konstanz, Department of Economics, University of Konstanz 2012-04, Department of Economics, University of Konstanz.
  4. Claudio Calcagno, 2012. "Stand-alone private antitrust damages: (how) should competition authorities react?," European Journal of Law and Economics, Springer, Springer, vol. 34(2), pages 365-389, October.
  5. Bourjade, Sylvain & Rey, Patrick & Seabright, Paul, 2009. "Private Antitrust Enforcement in the Presence of Pre-Trial Bargaining," TSE Working Papers, Toulouse School of Economics (TSE) 09-041, Toulouse School of Economics (TSE).
  6. Schinkel, M.P. & Tuinstra, J. & Rueggeberg, J., 2004. "Illinois Walls," CeNDEF Working Papers, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance 04-03, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
  7. Christopher C. Klein, 2007. "Anticompetitive Litigation and Antitrust Liability," Working Papers, Middle Tennessee State University, Department of Economics and Finance 200713, Middle Tennessee State University, Department of Economics and Finance.
  8. McAfee, R. Preston & Mialon, Hugo M. & Mialon, Sue H., 2008. "Private v. public antitrust enforcement: A strategic analysis," Journal of Public Economics, Elsevier, Elsevier, vol. 92(10-11), pages 1863-1875, October.
  9. Giorgio Rampa & Margherita Saraceno, 2014. "Beliefs and Precedent: The Dynamics of Access to Justice," DEM Working Papers Series, University of Pavia, Department of Economics and Management 084, University of Pavia, Department of Economics and Management.
  10. R. Preston McAfee & Hugo Mialon & Sue Mialon, 2005. "Private Versus Public Antitrust Enforcement: A Strategic Analysis," Emory Economics, Department of Economics, Emory University (Atlanta) 0523, Department of Economics, Emory University (Atlanta).
  11. Maarten Pieter Schinkel & Jan Tuinstra & Jakob Rüggeberg, 2005. "Illinois Walls," Tinbergen Institute Discussion Papers, Tinbergen Institute 05-049/1, Tinbergen Institute.
  12. Patrice Bougette & Christian Montet & Florent Venayre, 2006. "Jeux de négociation dans les affaires antitrust : engagements et transaction," Post-Print, HAL halshs-00476774, HAL.

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