Anticompetitive Litigation and Antitrust Liability
AbstractThe U.S. Supreme Court held that litigation for anticompetitive ends (“sham litigation”) must be “baseless” in order to face antitrust liability. The filing of such suits continues apace, as does the legal commentators’ debate, but economic analysis has lagged. Here, a game theoretic model is constructed in which plaintiffs file suit to achieve collateral gains and defendants may countersue for damages under the Sherman Act. In equilibrium, settlement fails and all suits are litigated, but the threat of countersuit deters low-expected-value plaintiffs. As the legal standard for sham litigation approaches “baselessness,” this deterrence effect is weakened and litigation may increase.
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Bibliographic InfoPaper provided by Middle Tennessee State University, Department of Economics and Finance in its series Working Papers with number 200713.
Date of creation: Aug 2007
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Web page: http://www.mtsu.edu/~berc/working/Economics_Working_Papers.html
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antitrust; sham litigation; countersuit;
Find related papers by JEL classification:
- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-08-27 (All new papers)
- NEP-COM-2007-08-27 (Industrial Competition)
- NEP-IND-2007-08-27 (Industrial Organization)
- NEP-LAW-2007-08-27 (Law & Economics)
- NEP-REG-2007-08-27 (Regulation)
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