The Cost of Antitrust Deterrence: Why Not Hang a Price Fixer Now and Then?

10 Pages Posted: 19 Feb 2002 Last revised: 2 Nov 2009

See all articles by J. Gregory Sidak

J. Gregory Sidak

Criterion Economics, L.L.C.

Michael K. Block

University of Arizona

Abstract

Through its antitrust enforcement system, society allocates resources to deter anticompetitive behavior. Antitrust enforcement is costly because prosecutors and judges mischaracterize some competitive or efficiency-enhancing behavior as horizontal collusion. In this early application of the Polinsky-Shavell argument about the tradeoff between the probability and magnitude of fines, this essay argues that, given prosecutorial and judicial error, society will not optimally allocate its antitrust enforcement resources by threatening price fixers with exorbitant economic penalties that have only a minimal probability of being enforced.

Suggested Citation

Sidak, J. Gregory and Block, Michael K., The Cost of Antitrust Deterrence: Why Not Hang a Price Fixer Now and Then?. Georgetown Law Journal, Vol. 68, No. 5, pp. 1131-1139, 1980. Available at SSRN: https://ssrn.com/abstract=301191 or http://dx.doi.org/10.2139/ssrn.301191

J. Gregory Sidak (Contact Author)

Criterion Economics, L.L.C. ( email )

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Michael K. Block

University of Arizona ( email )

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Tucson, AZ 85721-0108
United States
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