A Damage-Revelation Rationale for Coupon Remedies
This article studies optimal remedies in a setting in which damages vary among plaintiffs and are difficult to determine. We show that giving plaintiffs a choice between coupons to purchase units of the defendantâ€™s product at a discount and cash â€” a coupon-cash remedy â€” is superior to cash alone. The optimal coupon-cash remedy offers a cash amount that is less than the value of the coupons to plaintiffs who suffer relatively high harm. Such a remedy induces these plaintiffs to choose coupons, and plaintiffs who suffer relatively low harm to choose cash. Sorting plaintiffs in this way leads to better deterrence because the costs borne by defendants (the cash payments and the cost of providing coupons) more closely approximate the harms that they have caused.
|Date of creation:||01 Mar 2006|
|Date of revision:|
|Contact details of provider:|| Postal: |
Fax: (510) 642-3767
Web page: http://www.escholarship.org/repec/blewp/
More information through EDIRC
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.:
- Borenstein, Severin, 1996.
"Settling for Coupons: Discount Contracts as Compensation and Punishment in Antitrust Lawsuits,"
Journal of Law and Economics,
University of Chicago Press, vol. 39(2), pages 379-404, October.
- Severin Borenstein, 1995. "Settling for Coupons: Discount Contracts as Compensation and Punishment in Antitrust Lawsuits," NBER Working Papers 5085, National Bureau of Economic Research, Inc.
- Louis Kaplow & Steven Shavell, 1993.
"Accuracy in the Assessment of Damages,"
NBER Working Papers
4287, National Bureau of Economic Research, Inc.
- Spier, Kathryn E, 1994. "Settlement Bargaining and the Design of Damage Awards," Journal of Law, Economics and Organization, Oxford University Press, vol. 10(1), pages 84-95, April.
- 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 qt6943s2kd, Berkeley Olin Program in Law & Economics.
When requesting a correction, please mention this item's handle: RePEc:cdl:oplwec:qt15d402t1. 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: (Lisa Schiff)
If references are entirely missing, you can add them using this form.