Optimal Antitrust Enforcement: Judicial Standard, Judicial Error and Deterrence Effect

Abstract:     
This article analyzes the optimal antitrust enforcement rule, and, in doing so, presentes a model that illuminates two important issues. First, it compares the per se legal and illegal judicial standards with the rule of reason judicial standard in light of information costs and general social welfare. Second, it seeks to derive the optimal judicial standard that minimizes the problems of under- and over-deterrence. These two issues are closely related because the benefit of additional information can only be measured by its deterrent effects. In this respect, this work is a synthesis of economic models from decision theory and public enforcement of law. Lastly, in addition to discussion of the optimal information level, we derive the optimal permissiveness of the judicial standard.

Number of Pages in PDF File: 37

Keywords: Rule of Reason, Per Se Legal, Per Se Illegal, Decision Theory, Public Enforcement of Law

JEL Classification: K0, K2, K4, L4, L5

working papers series