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Antitrust Settlements and Trial Outcomes

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  • Perloff, Jeffrey M
  • Rubinfeld, Daniel L
  • Ruud, Paul

Abstract

Risk aversion plays an important role in explaining why antitrust cases settle instead of going to trial. Using a jointly estimated model of settlement and trial outcome, the authors find that a one percent increase in the probability that the plaintiff wins at trial raises the probability of a settlement by 0.13 percent. They also find that reputation effects are not a significant factor for defendants, so the risk aversion of the defendants does not play a dominant role in determining whether the parties settle. Plaintiffs are more likely to win in certain jurisdictions, which encourages venue shopping by plaintiffs. Copyright 1996 by MIT Press.

Suggested Citation

  • Perloff, Jeffrey M & Rubinfeld, Daniel L & Ruud, Paul, 1996. "Antitrust Settlements and Trial Outcomes," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 401-409, August.
  • Handle: RePEc:tpr:restat:v:78:y:1996:i:3:p:401-09
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    References listed on IDEAS

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    1. repec:kap:revind:v:52:y:2018:i:1:d:10.1007_s11151-017-9572-1 is not listed on IDEAS
    2. Martin Carree & Andrea Günster & Maarten Schinkel, 2010. "European Antitrust Policy 1957–2004: An Analysis of Commission Decisions," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 36(2), pages 97-131, March.
    3. Baptiste Massenot & Maria Maraki & Christian Thoeni, 2016. "Legal compliance and litigation spending under the English and American rule: Experimental evidence," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 16.19, Université de Lausanne, Faculté des HEC, DEEP.
    4. Daniel P. Kessler & Daniel L. Rubinfeld, 2004. "Empirical Study of the Civil Justice System," NBER Working Papers 10825, National Bureau of Economic Research, Inc.
    5. Peter Grajzl & Valentina Dimitrova-Grajzl & Katarina Zajc, 2016. "Inside post-socialist courts: the determinants of adjudicatory outcomes in Slovenian commercial disputes," European Journal of Law and Economics, Springer, pages 85-115.
    6. Budzinski Oliver & Kuchinke Björn A., 2012. "Deal or No Deal? Consensual Arrangements as an Instrument of European Competition Policy," Review of Economics, De Gruyter, vol. 63(3), pages 265-292, December.
    7. Dari-Mattiacci, Giuseppe & Deffains, Bruno & Lovat, Bruno, 2011. "The dynamics of the legal system," Journal of Economic Behavior & Organization, Elsevier, pages 95-107.
    8. repec:bin:bpeajo:v:29:y:1998:i:1998-3:p:1-53 is not listed on IDEAS
    9. Stiegert, Kyle W. & Hamilton, Stephen F., 1998. "Backward Implicit Contracts, Pre-Commitment And Market Power In The International Durum Wheat Market," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20833, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Hamilton, Stephen F. & Stiegert, Kyle W., 2002. "An empirical test of the rent-shifting hypothesis: the case of state trading enterprises," Journal of International Economics, Elsevier, pages 135-157.
    11. Dirk Crass & Dirk Czarnitzki & Andrew A. Toole, 2016. " The dynamic relationship between investments in brand equity and firm profitability: Evidence using trademark registrations," Working Papers Department of Managerial Economics, Strategy and Innovation (MSI) 526330, KU Leuven, Faculty of Economics and Business, Department of Managerial Economics, Strategy and Innovation (MSI).

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