American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Class Actions and Private Antitrust Litigation
American Economic Journal: Microeconomics
vol. 14,
no. 3, August 2022
(pp. 131–63)
Abstract
When firms collude and charge supracompetitive prices, consumers can bring antitrust lawsuits against the firms. When the litigation cost is low, firms accept the cost as just another cost of doing business, whereas when the cost is high, the firms lower the price to deter litigation. Class action is modeled as a mechanism that allows plaintiffs and attorneys to obtain economies of scale. We show that class actions, and the firms' incentive to block them, may or may not be socially desirable. Agency problems, settlement, fee-shifting, treble damages, public enforcement, and sustaining collusion through repeat play are also considered.Citation
Choi, Albert H., and Kathryn E. Spier. 2022. "Class Actions and Private Antitrust Litigation." American Economic Journal: Microeconomics, 14 (3): 131–63. DOI: 10.1257/mic.20200059Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D82 Asymmetric and Private Information; Mechanism Design
- K15 Civil Law; Common Law
- K21 Antitrust Law
- K41 Litigation Process
- L40 Antitrust Issues and Policies: General
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