Document Type
Article
Publication Date
3-2014
ISSN
1744-6414
Publisher
Oxford University Press
Language
en-US
Abstract
This article modifies the optimal punishment analysis by incorporating investment incentives with external benefits. In the models examined, the recommendation that the optimal penalty should internalize the marginal social harm is no longer valid. We focus on antitrust applications. In light of the benefits from innovation, the optimal policy will punish monopolizing firms more leniently than suggested in the standard static model. It may be optimal not to punish the monopolizing firm at all, or to reward the firm rather than punish it. We examine the precise balance between penalty and reward in the optimal punishment scheme.
Recommended Citation
Keith N. Hylton & Haizhen Lin,
Innovation and Optimal Punishment, with Antitrust Applications
,
in
10
Journal of Competition Law and Economics
1
(2014).
Available at:
https://scholarship.law.bu.edu/faculty_scholarship/190
Working paper available on SSRN
Included in
Antitrust and Trade Regulation Commons, Economic Theory Commons, Law and Economics Commons
Comments
Updated with published article: 9/21/22
Working paper available on SSRN