IDEAS home Printed from https://ideas.repec.org/p/zbw/zewdip/13081.html
   My bibliography  Save this paper

The effects of cartel damage compensations

Author

Listed:
  • Hunold, Matthias

Abstract

Damage compensation claims in case of cartels are supposed to increase deterrence, compensate losses and increase efficiency. I show that such claims can instead have adverse effects: If suppliers or buyers of cartelists are compensated in proportion to the profits lost due to the cartel, expected cartel profits can increase. Claims of downstream firms against upstream cartelists who do not monopolize the market increase consumer prices. Suppliers of cartelists can be worse off when eligible to compensation. These results apply also to abuses of dominance and call for a more careful approach towards the private enforcement of competition law.

Suggested Citation

  • Hunold, Matthias, 2013. "The effects of cartel damage compensations," ZEW Discussion Papers 13-081, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:13081
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/85266/1/770550088.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Maarten Pieter Schinkel & Jan Tuinstra & Jakob Rüggeberg, 2008. "Illinois Walls: how barring indirect purchaser suits facilitates collusion," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 683-698, September.
    2. Joseph E. Harrington, Jr., 2004. "Cartel Pricing Dynamics in the Presence of an Antitrust Authority," RAND Journal of Economics, The RAND Corporation, vol. 35(4), pages 651-673, Winter.
    3. Besanko, David & Spulber, Daniel F, 1990. "Are Treble Damages Neutral? Sequential Equilibrium and Private Antitrust Enforcement," American Economic Review, American Economic Association, vol. 80(4), pages 870-887, September.
    4. A. Mitchell Polinsky & Yeon-Koo Che, 1991. "Decoupling Liability: Optimal Incentives for Care and Litigation," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 562-570, Winter.
    5. Salant, Stephen W, 1987. "Treble Damage Awards in Private Lawsuits for Price Fixing," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1326-1336, December.
    6. Gerhard Wagner, "undated". "Schadensersatz bei Kartelldelikten," German Working Papers in Law and Economics 2007-1-1187, Berkeley Electronic Press.
    7. Ilya Segal, 1999. "Contracting with Externalities," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(2), pages 337-388.
    8. Stahl, Konrad & Röller, Lars-Hendrik & Hunold, Matthias, 2012. "Backwards Integration and Strategic Delegation," CEPR Discussion Papers 8910, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Katsoulacos, Yannis & Motchenkova, Evgenia & Ulph, David, 2020. "Combining cartel penalties and private damage actions: The impact on cartel prices," International Journal of Industrial Organization, Elsevier, vol. 73(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maarten Pieter Schinkel & Jan Tuinstra & Jakob Rüggeberg, 2008. "Illinois Walls: how barring indirect purchaser suits facilitates collusion," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 683-698, September.
    2. Andreea Cosnita-Langlais & Jean-Philippe Tropeano, 2018. "How procedures shape substance: institutional design and antitrust evidentiary standards," European Journal of Law and Economics, Springer, vol. 46(1), pages 143-164, August.
    3. Sylvain Bourjade & Patrick Rey & Paul Seabright, 2009. "Private Antitrust Enforcement In The Presence Of Pre‐Trial Bargaining," Journal of Industrial Economics, Wiley Blackwell, vol. 57(3), pages 372-409, September.
    4. McAfee, R. Preston & Mialon, Hugo M. & Mialon, Sue H., 2008. "Private v. public antitrust enforcement: A strategic analysis," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 1863-1875, October.
    5. Katsoulacos, Yannis & Motchenkova, Evgenia & Ulph, David, 2020. "Combining cartel penalties and private damage actions: The impact on cartel prices," International Journal of Industrial Organization, Elsevier, vol. 73(C).
    6. Joseph E. Harrington, 2005. "Optimal Cartel Pricing In The Presence Of An Antitrust Authority," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 145-169, February.
    7. Flavia Roldán, 2012. "Collusive Networks in Market‐Sharing Agreements in the Presence of an Antitrust Authority," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(4), pages 965-987, December.
    8. Schinkel, M.P. & Tuinstra, J. & Rueggeberg, J., 2003. "Illinois walls," Research Memorandum 012, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    9. Schinkel, Maarten Pieter & Tuinstra, Jan, 2006. "Imperfect competition law enforcement," International Journal of Industrial Organization, Elsevier, vol. 24(6), pages 1267-1297, November.
    10. Gerlach, Heiko & Li, Junqian, 2024. "Collusion in the presence of antitrust prosecution: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 222(C), pages 427-445.
    11. Gianmaria Martini, 2005. "Hard Core Cartels and Avoidance of Investigation in the Presence of an Antitrust Authority," Working Papers 0505, Department of Management, Information and Production Engineering, University of Bergamo.
    12. Harrington, Joseph Jr. & Chen, Joe, 2006. "Cartel pricing dynamics with cost variability and endogenous buyer detection," International Journal of Industrial Organization, Elsevier, vol. 24(6), pages 1185-1212, November.
    13. Gianmaria Martini & Cinzia Rovesti, 2004. "Antitrust policy and price collusion. Public agencies vs delegation," Recherches économiques de Louvain, De Boeck Université, vol. 70(2), pages 127-151.
    14. Iwan Bos & Maarten Pieter Schinkel, 2009. "Tracing the Base: A Topographic Test for Collusive Basing-Point Pricing," Tinbergen Institute Discussion Papers 09-007/1, Tinbergen Institute.
    15. Schwartz, Warren F. & Wickelgren, Abraham L., 2011. "Optimal antitrust enforcement: Competitor suits, entry, and post-entry competition," Journal of Public Economics, Elsevier, vol. 95(7), pages 967-972.
    16. Joseph E. Harrington, Jr, 2005. "Detecting Cartels," Economics Working Paper Archive 526, The Johns Hopkins University,Department of Economics.
    17. Gianmaria Martini, 2002. "Antitrust Policy and Collusion through Credible Covenants," Working Papers (-2012) 0204, University of Bergamo, Department of Economics.
    18. Usher, Dan, 2001. "Personal goods, efficiency and the law," European Journal of Political Economy, Elsevier, vol. 17(4), pages 673-703, November.
    19. Raphaël Soubeyran, 2019. "Technology adoption and pro-social preferences," CEE-M Working Papers halshs-02291905, CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro.
    20. Sergio Currarini & Carmen Marchiori & Alessandro Tavoni, 2016. "Network Economics and the Environment: Insights and Perspectives," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(1), pages 159-189, September.

    More about this item

    Keywords

    competition law; cartel damage compensation; deterrence; overcharge; private enforcement; vertical relations;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:zewdip:13081. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/zemande.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.