Private Antitrust Enforcement in the Presence of Pre-Trial Bargaining

Posted by D. Daniel Sokol

Sylvain Bourjade, University of Toulouse - Econ; Patrick Rey, University of Toulouse - Econ, and Paul Seabright, University of Toulouse - Industrial Economic Institute explain Private Antitrust Enforcement in the Presence of Pre-Trial Bargaining.

ABSTRACT: We study the effect of encouraging private actions for breaches of competition law. We develop a model of litigation and settlement with asymmetric information. We show that screening liable from non-liable defendants requires the Court to restrict the rules governing admissible evidence. We study how to design the rules so as to enhance the role of private litigation in antitrust enforcement and prove that increasing damages is better than reducing costs of initiating suits. We also find large benefits from introducing a system of compensation for defendants found non-liable, paid by unsuccessful plaintiffs.