Class Actions and Private Antitrust Litigation

14:3 American Economic Journal: Microeconomics 131 (2022)

U of Michigan Law & Econ Research Paper No. 20-021

53 Pages Posted: 28 Sep 2020 Last revised: 11 Aug 2022

See all articles by Albert H. Choi

Albert H. Choi

University of Michigan Law School

Kathryn E. Spier

Harvard University - Law School - Faculty; National Bureau of Economic Research (NBER)

Date Written: September 1, 2020

Abstract

When firms collude and charge supra-competitive prices, consumers can bring antitrust lawsuits against the firms. When the litigation cost is low, firms accept the cost as just another cost of doing business, whereas when the cost is high, the firms lower the price to deter litigation. Class action is modeled as a mechanism that allows plaintiffs and attorneys to obtain economies of scale. We show that class actions, and the firms' incentive to block them, may or may not be socially desirable. Agency problems, settlement, fee-shifting, treble damages, public enforcement, and sustaining collusion through repeat play are also considered.

Keywords: Antitrust Lawsuits, Class Actions, Class Action Waivers

JEL Classification: D21, K12, K21, K41, L41

Suggested Citation

Choi, Albert H. and Spier, Kathryn E., Class Actions and Private Antitrust Litigation (September 1, 2020). 14:3 American Economic Journal: Microeconomics 131 (2022), U of Michigan Law & Econ Research Paper No. 20-021, Available at SSRN: https://ssrn.com/abstract=3329316 or http://dx.doi.org/10.2139/ssrn.3329316

Albert H. Choi (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States

HOME PAGE: http://www.law.umich.edu/FacultyBio/Pages/FacultyBio.aspx?FacID=alchoi

Kathryn E. Spier

Harvard University - Law School - Faculty ( email )

1575 Massachusetts
Hauser 302
Cambridge, MA 02138
United States
(617) 496-0019 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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