Advanced Search
MyIDEAS: Login to save this paper or follow this series

Settling for Coupons: Discount Contracts as Compensation and Punishment in Antitrust Lawsuits

Contents:

Author Info

  • Severin Borenstein

Abstract

A number of recent antitrust lawsuits have been settled with discount contracts in which the defendants agree in the future to sell to the plaintiffs at a discount off of the price they offer to other buyers. Economists often object to such settlements, arguing that the sellers will partially or fully offset these discounts by increasing the baseline price from which the discount is calculated. This paper shows that poorly structured discount contracts will indeed result in price increases for other buyers and that other buyers, not the sellers, are likely to bear most of the cost imposed by the settlement. Carefully formulated discount settlements, however, can avoid giving the sellers an incentive to raise prices to buyers not covered by the settlement. In such cases, the defendant bears the full cost of the settlement. I suggest that poorly structured settlements still take place because their costs are borne primarily by consumers who are not parties to these cases.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.nber.org/papers/w5085.pdf
Download Restriction: no

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5085.

as in new window
Length:
Date of creation: Apr 1995
Date of revision:
Publication status: published as Journal of Law and Economics, October 1996, vol.39, no.2, pp.379-404.
Handle: RePEc:nbr:nberwo:5085

Note: IO
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Baldenius, Tim & Reichelstein, Stefan J., 2004. "External and Internal Pricing in Multidivisional Firms," Research Papers 1825r, Stanford University, Graduate School of Business.
  2. A. Mitchell Polinsky & Daniel L. Rubinfeld, 2005. "A Damage-Revelation Rationale for Coupon Remedies," Discussion Papers, Stanford Institute for Economic Policy Research 04-009, Stanford Institute for Economic Policy Research.
  3. Polinsky, A. Mitchell & Rubinfeld, Daniel L, 2007. "A Damage-Revelation Rationale for Coupon Remedies," Berkeley Olin Program in Law & Economics, Working Paper Series, Berkeley Olin Program in Law & Economics qt05s924dk, Berkeley Olin Program in Law & Economics.
  4. Polinsky, A. Mitchell & Rubinfeld, Daniel L., 2006. "A Damage-Revelation Rationale for Coupon Remedies," Berkeley Olin Program in Law & Economics, Working Paper Series, Berkeley Olin Program in Law & Economics qt15d402t1, Berkeley Olin Program in Law & Economics.
  5. Polinsky, A. Mitchell & Rubinfeld, Daniel L., 2003. "Remedies for Price Overcharges: The Deadweight Loss of Coupons and Discounts," Competition Policy Center, Working Paper Series, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley qt92m0w4px, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
  6. A. Mitchell Polinsky & Daniel Rubinfeld, . "Remedies for Price Overcharges: The Deadweight Loss of Coupons and Discounts," American Law & Economics Association Annual Meetings, American Law & Economics Association 1060, American Law & Economics Association.
  7. Polinsky, A. Mitchell & Rubinfeld, Daniel L., 2003. "Remedies For Price Overcharges: The Deadweight Loss Of Coupons And Discounts," Berkeley Olin Program in Law & Economics, Working Paper Series, Berkeley Olin Program in Law & Economics qt1gs1g2g2, Berkeley Olin Program in Law & Economics.
  8. Polinsky, A. Mitchell & Rubinfeld, Daniel L., 2006. "The Deadweight Loss of Coupon Remedies for Price Overcharges," Berkeley Olin Program in Law & Economics, Working Paper Series, Berkeley Olin Program in Law & Economics qt6943s2kd, Berkeley Olin Program in Law & Economics.
  9. de Frutos, María-Ángeles & Fabra, Natalia, 2012. "How to allocate forward contracts: The case of electricity markets," European Economic Review, Elsevier, vol. 56(3), pages 451-469.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:5085. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.