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Private v. public antitrust enforcement: A strategic analysis

Author

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  • McAfee, R. Preston
  • Mialon, Hugo M.
  • Mialon, Sue H.

Abstract

We compare private and public enforcement of the antitrust laws in a simple strategic model of antitrust violation and lawsuit. The model highlights the tradeoff that private firms are initially more likely than the government to be informed about antitrust violations, but are also more likely to use the antitrust laws strategically, to the disadvantage of consumers. Assuming coupled private damages, if the court is sufficiently accurate, adding private enforcement to public enforcement always increases social welfare, while if the court is less accurate, it increases welfare only if the government is sufficiently inefficient in litigation. Pure private enforcement is never strictly optimal. Public enforcement can achieve the social optimum with a fee for public lawsuit that induces efficient information revelation. Private enforcement can also achieve the social optimum with private damages that are efficiently multiplied and decoupled.

Suggested Citation

  • McAfee, R. Preston & Mialon, Hugo M. & Mialon, Sue H., 2008. "Private v. public antitrust enforcement: A strategic analysis," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 1863-1875, October.
  • Handle: RePEc:eee:pubeco:v:92:y:2008:i:10-11:p:1863-1875
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    References listed on IDEAS

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    Cited by:

    1. Larcom Shaun & Swanson Timothy, 2015. "Documenting Legal Dissonance: Legal Pluralism in Papua New Guinea," Review of Law & Economics, De Gruyter, vol. 11(1), pages 25-50, March.
    2. Aldo, González & Alejandro, Micco & Constanza, Caicha, 2013. "El impacto de la persecución pública en los juicios de libre competencia en Chile," Estudios Públicos, Centro de Estudios Públicos, vol. 0(132), pages 39-69.
    3. Grajzl, Peter & Baniak, Andrzej, 2018. "Private enforcement, corruption, and antitrust design," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 284-307.
    4. repec:eee:pubeco:v:155:y:2017:i:c:p:64-73 is not listed on IDEAS
    5. Avdasheva, Svetlana & Kryuchkova, Polina, 2015. "The ‘reactive’ model of antitrust enforcement: When private interests dictate enforcement actions – The Russian case," International Review of Law and Economics, Elsevier, vol. 43(C), pages 200-208.

    More about this item

    Keywords

    L44 H11 H41 K21 D82 Private and public enforcement Antitrust laws Strategic abuse Free-riding Information revelation Social welfare;

    JEL classification:

    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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