Stephen Salant's analysis of multiple damages for private antitrust suits ("Treble Damage Awards in Private Lawsuits for Price Fixing," Journal of Political Economy, December 1987) is generalized. The neutrality result that multiple damages do not affect production is shown to hold for a wide range of expected penalty and cost functions, provided indemnification is complete and consumers expect penalties to be a multiple of quantity purchased. If consumers receive less than the cartel pays, neutrality is much less likely.
This report is part of the RAND Corporation paper series. The paper was a product of the RAND Corporation from 1948 to 2003 that captured speeches, memorials, and derivative research, usually prepared on authors' own time and meant to be the scholarly or scientific contribution of individual authors to their professional fields. Papers were less formal than reports and did not require rigorous peer review.
The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.