Treble Damages and the Incentive to Sue and Settle

Hugh C. Briggs, Kathleen D. Huryn and Mark McBride ()

RAND Journal of Economics, 1996, vol. 27, issue 4, 770-786

Abstract: We apply Png's (1983) model to antitrust suits to determine the effects of private suits on government suits and vice versa. In equilibrium, a defendant can probabilistically signal a strong case by not offering to settle. A violator's incentive to signal a strong case to deter a treble damage suit forces the government to pursue more trials than it would otherwise. Private plaintiffs are more likely to settle following a government suit than otherwise, but they win a trial with the same probability regardless of whether there was a previous government suit. Data on private suits support the latter two contentions.

Date: 1996
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