Optimal Antitrust Penalties and Competitors' Injury

Determination of optimal penalties for antitrust violations in a dynamic setting

We analyze a di¤erential game describing the interactions between a …rm that might be violating competition law and the antitrust authority. The objective of the authority is to minimize social costs (loss in consumer surplus) induced by an increase in prices above marginal costs. It turns out that the penalty schemes which are used now in EU and US legislation appear not to be as e¢ cient as d...

The Reputational Penalties to Firms in Antitrust Investigations

We examines the legal penalties imposed on Dutch listed firms targeted by competition authorities from 1998-2008. By using event study techniques we estimate the impact of the main events in an antitrust investigation on a firm’s stock market value and analyse the causes of the value impacts. The first announcement of an antitrust investigation has a statistically significant effect on the firm...

Optimal Enforcement and Adequate Penalties

When inspection is used to enforce a rule in a context such as arms control, auditing, or food and drug inspection, there is a conflict between inspector and inspectee that can be modeled as a non-zerosum strategic-form game. Suppose that the inspectee may violate at any subset of n non-identical “sites”, complying at the rest. The inspector chooses k < n sites at which to assess the inspectee’...

Avoidance Costs in Optimal Penalties

Optimal Insider Strategy with Law Penalties

It is very well known and documented that in many markets some traders had more information than others, more exactly they construct their strategies based on the knowledge of future events, this future information is known as the inside information and these traders are known as being the insiders of the market. Of course this kind of trading is illegal and the insiders are exposed to the risk...