Browsing by Author "Ata, Michael Norman"

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    Essays on Endogenous Behaviour in Antitrust Litigation
    (2019-04-12) Ata, Michael Norman; Church, Jeffrey; Hollis, Aidan; Roberts, Joanne; Migrow, Dimitri; Landeo, Claudia M.
    In this thesis, I formulate and assess the strategic interaction between a firm and competition authority (CA) as a game. Unlike prior models of litigation, I allow the CA to be non-committal over enforcement by allowing the aggressiveness of firm activity to influence its choice of policy, where aggressiveness is defined as an act that sets objective probabilities over consequences. By allowing non-commitment over policy enforcement, I focus on how an endogenous policy response to firm activity influences decisions made in equilibrium, and its subsequent impact on social welfare. In Chapter 1, I conduct a review of law, policy, and economics literature on the topic of antitrust litigation, and law and economics in general. I find the conventional method of modeling in law and economics and antitrust-specific settings imposes commitment over a government/legal authorities policy before agents decide whether to take a welfare benign (or legal) or harmful (illegal) action. I argue that because unilateral firm conduct has progressed to be evaluated under an effects-based standard, aggressiveness may influence the thoroughness of evidence presented in adjudication. In Chapter 2, I formalize the strategic interaction between a firm and CA as a game and assess their interaction. I find that conditional on firm aggressiveness, there are three general policy ranges that are viable for the CA to implement: forgoing investigation, investigation with minimal effort in adjudication, and investigation with non-minimal effort. I find all three policy ranges are viable in equilibrium. I further find a potential perverse effect may occur in equilibrium; increasing the CAs efficiency or resources in adjudication may decrease social welfare. The decrease is attributable to the CA and firm; increasing efficiency or resources in adjudication alters the CAs enforcement policy, which the firm responds to. The firms' optimal choice of aggressiveness may increase in response to either effect. In Chapter 3, I extend the model formulated in Chapter 2 to evaluate how a multiple firm environment affects firm aggressiveness and the CAs enforcement policy.