Illinois Walls

Maarten Pieter Schinkel (), Jan Tuinstra and Jakob Rüggeberg
Additional contact information
Maarten Pieter Schinkel: Department of Economics, Universiteit van Amsterdam
Jakob Rüggeberg: LECG, Madrid and Brussels

No 05-049/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: In its landmark ruling in Illinois Brick Co. v. Illinois in 1977, the U.S. Supreme Court restricted standing to sue for recovery of antitrust damages to direct purchasers. However, antitrust damages are typically (in part) passed on to intermediaries lower in the chain of production and ultimately to consumers. We show that the Illinois Brick rule facilitates collusion. It allows an upstream cartel to shield itself from private damage claims by forwarding a share of cartel profits to its direct purchasers. These benefits dissuade the direct purchasers from exercising their exclusive right to sue for private damages. The cartel can achieve this by rationing inputs at low prices. Several U.S. antitrust cases show symptoms of "Illinois Walls."

This discussion paper has resulted in an article in the RAND Journal of Economics , 39(3), 683-99.

Keywords: Antitrust; treble private damages; Illinois Brick; tacit collusion; vertical restraints; rationing (search for similar items in EconPapers)
JEL-codes: D4 L1 L4 (search for similar items in EconPapers)
Date: 2005-05-24
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://papers.tinbergen.nl/05049.pdf (application/pdf)

Related works:
Working Paper: Illinois Walls (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20050049

Access Statistics for this paper

More papers in Tinbergen Institute Discussion Papers from Tinbergen Institute Contact information at EDIRC.
Bibliographic data for series maintained by Tinbergen Office +31 (0)10-4088900 ().