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Treble Damages and the Incentive to Sue and Settle

Author

Listed:
  • 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.

Suggested Citation

  • Hugh C. Briggs III & Kathleen D. Huryn & Mark E. McBride, 1996. "Treble Damages and the Incentive to Sue and Settle," RAND Journal of Economics, The RAND Corporation, vol. 27(4), pages 770-786, Winter.
  • Handle: RePEc:rje:randje:v:27:y:1996:i:winter:p:770-786
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    Citations

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    Cited by:

    1. Christopher C. Klein, 2007. "Anticompetitive Litigation and Antitrust Liability," Working Papers 200713, Middle Tennessee State University, Department of Economics and Finance.
    2. repec:kap:revind:v:52:y:2018:i:1:d:10.1007_s11151-017-9572-1 is not listed on IDEAS
    3. Schinkel Maarten Pieter & Rüggeberg Jakob & Tuinstra Jan, 2003. "Illinois Walls," Research Memorandum 027, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    4. Andreea Cosnita-Langlais & Jean-Philippe Tropeano, 2014. "Institutional Design and Antitrust Evidentiary Standards," Post-Print hal-01668447, HAL.
    5. Tim Reuter, 2016. "Private antitrust enforcement and the role of harmed parties in public enforcement," European Journal of Law and Economics, Springer, vol. 41(3), pages 479-507, June.
    6. Giorgio Rampa & Margherita Saraceno, 2014. "Beliefs and Precedent: The Dynamics of Access to Justice," DEM Working Papers Series 084, University of Pavia, Department of Economics and Management.
    7. 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.
    8. Bourjade, Sylvain & Rey, Patrick & Seabright, Paul, 2009. "Private Antitrust Enforcement in the Presence of Pre-Trial Bargaining," IDEI Working Papers 499, Institut d'Économie Industrielle (IDEI), Toulouse.
    9. Schinkel, Maarten Pieter & Tuinstra, Jan, 2006. "Imperfect competition law enforcement," International Journal of Industrial Organization, Elsevier, vol. 24(6), pages 1267-1297, November.
    10. Patrice Bougette & Christian Montet & Florent Venayre, 2006. "Jeux de négociation dans les affaires antitrust : engagements et transaction," Post-Print halshs-00476774, HAL.
    11. 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 2012-04, Department of Economics, University of Konstanz.
    12. 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).
    13. Claudio Calcagno, 2012. "Stand-alone private antitrust damages: (how) should competition authorities react?," European Journal of Law and Economics, Springer, vol. 34(2), pages 365-389, October.
    14. Heyes, Anthony & Rickman, Neil, 1999. "Regulatory dealing - revisiting the Harrington paradox," Journal of Public Economics, Elsevier, vol. 72(3), pages 361-378, June.
    15. Maarten Pieter Schinkel & Jan Tuinstra & Jakob Rüggeberg, 2008. "Illinois Walls: how barring indirect purchaser suits facilitates collusion," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 683-698.
    16. Sylvain Bourjade & Patrick Rey & Paul Seabright, 2009. "PRIVATE ANTITRUST ENFORCEMENT IN THE PRESENCE OF PRE-TRIAL BARGAINING -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 57(3), pages 372-409, September.
    17. repec:kap:ejlwec:v:46:y:2018:i:1:d:10.1007_s10657-018-9574-y is not listed on IDEAS
    18. Michael Hellwig & Kai Hüschelrath & Ulrich Laitenberger, 2018. "Settlements and Appeals in the European Commission’s Cartel Cases: An Empirical Assessment," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 52(1), pages 55-84, February.

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