IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Optimal antitrust enforcement: Competitor suits, entry, and post-entry competition

  • Schwartz, Warren F.
  • Wickelgren, Abraham L.
Registered author(s):

    We consider the effect of competitor suits in a model in which an incumbent can take an action that deters the entry of a rival. The option to sue the incumbent can provide a subsidy for entry which can maintain competition even when the incumbent takes this action. Liability for the entrant's lost profits, however, can soften post-entry competition. If the incumbent's action is potentially efficient, taking market structure as given, e.g. it reduces her costs, then competitor suits can generate some post-entry competition without deterring this efficient cost-reduction. If the incumbent's action is inefficient, e.g. it increases the rival's costs (but does not reduce the incumbent's costs), then competitor suits (even with maximal antitrust liability) cannot deter the incumbent from increasing the rival's costs by at least a small amount. Thus, the paper suggests that while competitor suits have advantages for efficient actions that deter efficient entry, they do not work well for inefficient actions that deter entry.

    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.sciencedirect.com/science/article/pii/S0047272711000107
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Elsevier in its journal Journal of Public Economics.

    Volume (Year): 95 (2011)
    Issue (Month): 7 ()
    Pages: 967-972

    as
    in new window

    Handle: RePEc:eee:pubeco:v:95:y:2011:i:7:p:967-972
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. R. Preston McAfee & Hugo Mialon & Sue Mialon, 2005. "Private Versus Public Antitrust Enforcement: A Strategic Analysis," Emory Economics 0523, Department of Economics, Emory University (Atlanta).
    2. Bourjade, Sylvain & Rey, Patrick & seabright, paul, 2009. "Private antitrust enforcement in the presence of pre-trial bargaining," MPRA Paper 34840, University Library of Munich, Germany.
    3. Gary S. Becker & George J. Stigler, 1974. "Law Enforcement, Malfeasance, and Compensation of Enforcers," The Journal of Legal Studies, University of Chicago Press, vol. 3(1), pages 1-18, January.
    4. ., 2004. "R," Chapters, in: An Eponymous Dictionary of Economics, chapter 17 Edward Elgar.
    5. ., 2004. "M," Chapters, in: An Eponymous Dictionary of Economics, chapter 13 Edward Elgar.
    6. Gianmaria MARTINI & Cinzia ROVESTI, 2004. "Antitrust policy and price collusion : public agencies vs delegation," Discussion Papers (REL - Recherches Economiques de Louvain) 2004021, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    7. ., 2004. "H," Chapters, in: An Eponymous Dictionary of Economics, chapter 8 Edward Elgar.
    8. Baumol, William J & Ordover, Janusz A, 1985. "Use of Antitrust to Subvert Competition," Journal of Law and Economics, University of Chicago Press, vol. 28(2), pages 247-65, May.
    9. Wickelgren Abraham L., 2004. "A Model of Welfare-Reducing Settlement," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(1), pages 1-22, May.
    10. Salant, Stephen W, 1987. "Treble Damage Awards in Private Lawsuits for Price Fixing," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1326-36, December.
    11. ., 2004. "S," Chapters, in: An Eponymous Dictionary of Economics, chapter 18 Edward Elgar.
    12. ., 2004. "N," Chapters, in: An Eponymous Dictionary of Economics, chapter 14 Edward Elgar.
    13. Besanko, David & Spulber, Daniel F, 1990. "Are Treble Damages Neutral? Sequential Equilibrium and Private Antitrust Enforcement," American Economic Review, American Economic Association, vol. 80(4), pages 870-87, September.
    14. N. Gregory Mankiw & Michael D. Whinston, 1986. "Free Entry and Social Inefficiency," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 48-58, Spring.
    15. ., 2004. "F," Chapters, in: An Eponymous Dictionary of Economics, chapter 6 Edward Elgar.
    16. ., 2004. "T," Chapters, in: An Eponymous Dictionary of Economics, chapter 19 Edward Elgar.
    17. ., 2004. "A," Chapters, in: An Eponymous Dictionary of Economics, chapter 1 Edward Elgar.
    18. ., 2004. "D," Chapters, in: An Eponymous Dictionary of Economics, chapter 4 Edward Elgar.
    19. ., 2004. "O," Chapters, in: An Eponymous Dictionary of Economics, chapter 15 Edward Elgar.
    20. ., 2004. "I," Chapters, in: An Eponymous Dictionary of Economics, chapter 9 Edward Elgar.
    21. ., 2004. "C," Chapters, in: An Eponymous Dictionary of Economics, chapter 3 Edward Elgar.
    22. Baker, Jonathan B, 1988. "Private Information and the Deterrent Effect of Antitrust Damage Remedies," Journal of Law, Economics and Organization, Oxford University Press, vol. 4(2), pages 385-408, Fall.
    23. Shavell, Steven, 1993. "The Optimal Structure of Law Enforcement," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 255-87, April.
    24. ., 2004. "W," Chapters, in: An Eponymous Dictionary of Economics, chapter 21 Edward Elgar.
    25. ., 2004. "G," Chapters, in: An Eponymous Dictionary of Economics, chapter 7 Edward Elgar.
    26. ., 2004. "L," Chapters, in: An Eponymous Dictionary of Economics, chapter 12 Edward Elgar.
    27. ., 2004. "E," Chapters, in: An Eponymous Dictionary of Economics, chapter 5 Edward Elgar.
    Full references (including those not matched with items on IDEAS)

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

    When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:95:y:2011:i:7:p:967-972. 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: (Zhang, Lei)

    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.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.