NCJ Number
73781
Journal
Georgetown Law Journal Volume: 68 Issue: 5 Dated: (June 1980) Pages: 1075-1102
Date Published
1980
Length
28 pages
Annotation
The cost minimization approach is suggested to improve the efficiency of antitrust enforcement.
Abstract
In applying the cost minimization approach to legal systems, three types of costs must be minmized: (1) costs resulting from the harmful conduct subject to regulation, (2) cost of apprehending and determining the guilt of offenders, and (3) cost of sanctions. The latter two costs are incurred by the legal system. An essential factor in minimizing the costs of legal systems is the setting of the right 'price' for violations; this prize is defined as the product of the magnitude of sanctions and the probability of enforcement. If the price insufficient, too undesirable conduct will occur. If the price is too high, too little undesirable conduct will occur, and the cost of law enforcement will be too high. With regard to efficiency, the article suggests that a system that penalizes only successful price fixing might be more desirable than a series of per se prohibitions which penalize all price fixing. With regard to private versus public antitrust enforcement, it is argued that independent private prosecutors, mainly lawyers, acting for the sake of financial compensation would be more effective than public prosecutors who have no immediate incentive for court action. In the interest of efficiency, the responsibilities for litigation costs would be reorganized. Both plaintiff and defendant would only be reimbursed for efficient (i.e., successful) court action. A party who makes an inefficient expenditure should not receive payment for it and, moreover, should be charged for the cost of any efficient response to it by the adversary. The article includes bibliographical footnotes.