Private Enforcement, Corruption, and Antitrust Design

49 Pages Posted: 21 Dec 2015

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: November 17, 2015

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: K210, L400, H110, P510

Suggested Citation

Grajzl, Peter and Baniak, Andrzej, Private Enforcement, Corruption, and Antitrust Design (November 17, 2015). CESifo Working Paper Series No. 5602. Available at SSRN: https://ssrn.com/abstract=2706400

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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