Tuesday, March 27, 2012
Private antitrust enforcement revisited: The role of private incentives to report evidence to the antitrust authority
Posted by D. Daniel Sokol
Tim Reuter (Department of Economics, University of Konstanz, Germany) addresses Private antitrust enforcement revisited: The role of private incentives to report evidence to the antitrust authority.
ABSTRACT: It is commonly believed that the possibility to sue privately for antitrust damages decreases the number of type II errors in enforcement at the cost of creating more type I errors. We extend the analysis by taking into account the fact that private parties often submit evidence during public prosecution. Such parties consider private suit as a partial substitute for public prosecution, as both imply desistance of the violation. The trial option might induce these parties to be less willing to contribute evidence to public cases. Private trials crowd out public prosecution and can have ambiguous effects on the number of enforcement errors.