private antitrust suits (

private antitrust suits (

private antitrust suits (i.e. those brought under Section 4 of the Clayton Act) are settled. In class we analyzed the suit as an asset to the plaintiff and a liability to the defendant. If the defendant ?values? the liability more than the plaintiff values the asset, the defendant will in effect buy it. This is how a settlement occurs.Suppose that the defendant, in addition to the other losses from losing the antitrust suit, stands to lose some monetary lump sum (Y) because of damage to the reputation of his or her business (regardless of the outcome of the case). In the case where both parties have the same assessments (P= P), is a settlement still guaranteed to happen? Will this make a settlement more or less likely? By how much?Suppose (starting from the original model) that instead of always paying his or her own litigation costs, the defendant only pays these costs when the case is lost. In the case where both parties have the same assessments (P= P), is a settlement still guaranteed to happen? If so, is it more or less likely? By how much?Now consider a case where the parties involved have different subjective beliefs about the likelihood of the plaintiff winning the case. If P= 0.5, P= 0.7, C= 50, and C= 60, what level do the damages have to be in order for this case to NOT be settled?

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