Private Enforcement, Corruption, and Antitrust Design

54 Pages Posted: 24 Oct 2015 Last revised: 5 Feb 2016

See all articles by Peter Grajzl

Peter Grajzl

Washington and Lee University - Department of Economics; CESifo

Andrzej Baniak

Central European University (CEU) - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: January 19, 2016

Abstract

Recent adoption of competition laws across the globe has highlighted the importance of institutional considerations for antitrust effectiveness and the need for comparative institutional analyses of antitrust that extend beyond matters of substantive law. Contributing to the resulting nascent research agenda, we examine how the rationale for enabling versus precluding private antitrust enforcement as one salient choice in antitrust design depends on whether antitrust enforcement is corruption-free or plagued by corruption. Contingent on the nature of adjudicatory bias, bribery either discourages private antitrust lawsuits or incentivizes firms to engage in frivolous litigation. Corruption expectedly reduces the effectiveness of antitrust enforcement at deterring antitrust violations. Yet private antitrust enforcement as a complement to public enforcement can be social welfare-enhancing even in the presence of corruption. Under some circumstances, corruption actually increases the relative social desirability of private antitrust enforcement. Our analysis highlights that the appropriate design of antitrust institutions is context-specific.

Keywords: antitrust, corruption, private enforcement, public enforcement, institutional design

JEL Classification: K21, L40, H11, P51

Suggested Citation

Grajzl, Peter and Baniak, Andrzej, Private Enforcement, Corruption, and Antitrust Design (January 19, 2016). Available at SSRN: https://ssrn.com/abstract=2678566 or http://dx.doi.org/10.2139/ssrn.2678566

Peter Grajzl (Contact Author)

Washington and Lee University - Department of Economics ( email )

Lexington, VA 24450
United States

HOME PAGE: http://home.wlu.edu/~grajzlp/

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Andrzej Baniak

Central European University (CEU) - Department of Economics ( email )

Nador u. 9.
Budapest H-1051
Hungary
(36) 1 327-3231 (Phone)
(36) 1 327-3232 (Fax)

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