Abstract

http://ssrn.com/abstract=1305147
 
 

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Innovation and Optimal Punishment, with Antitrust Applications


Keith N. Hylton


William Fairfield Warren Distinguished Professor, Boston University; Professor of Law, Boston University School of Law

Haizhen Lin


Indiana University

July 24, 2013

Forthcoming Journal of Competition Law & Economics
Boston Univ. School of Law Working Paper No. 08-33

Abstract:     
This paper modifies the optimal penalty analysis by incorporating investment incentives with external benefits. In the models examined, the recommendation that the optimal penalty should internalize the marginal social harm is no longer valid as a general rule. We focus on antitrust applications. In light of the benefits from innovation, the optimal policy will punish monopolizing firms more leniently than suggested in the standard static model. It may be optimal not to punish the monopolizing firm at all, or to reward the firm rather than punish it. We examine the precise balance between penalty and reward in the optimal punishment scheme.

Number of Pages in PDF File: 41

Keywords: optimal law enforcement, optimal antitrust penalty, monopolization, innovation, internalization, strict liability, static penalty

JEL Classification: D42, K14, K21, K42, L41, L43

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Date posted: November 21, 2008 ; Last revised: July 24, 2013

Suggested Citation

Hylton, Keith N. and Lin, Haizhen, Innovation and Optimal Punishment, with Antitrust Applications (July 24, 2013). Forthcoming Journal of Competition Law & Economics; Boston Univ. School of Law Working Paper No. 08-33. Available at SSRN: http://ssrn.com/abstract=1305147 or http://dx.doi.org/10.2139/ssrn.1305147

Contact Information

Keith N. Hylton (Contact Author)
William Fairfield Warren Distinguished Professor, Boston University ( email )
595 Commonwealth Avenue
Boston, MA 02215
United States
617-353-8959 (Phone)
Professor of Law, Boston University School of Law ( email )
765 Commonwealth Avenue
Boston, MA 02215
United States
617-353-8959 (Phone)
617-353-3077 (Fax)
Haizhen Lin
Indiana University ( email )
1309 East Tenth Street
Bloomington, IN 47405-1701
United States
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