Template-type: ReDif-Paper 1.0
Author-Name: Schinkel Maarten Pieter
Author-Name: Rüggeberg Jakob
Author-Name: Tuinstra Jan
Author-workplace-name: METEOR
Title: Illinois Walls
Abstract: In its landmark ruling in Illinois Brick Co. v. Illinois, the U.S. Supreme Court restricted the right to sue for private damages from violations of section 4 of the Clayton Act to direct purchasers. Despite the fact that typically antitrust injury is, at least in part, passed on to firms lower in the production chain and ultimately to consumers, Illinois Brick has since stood as a binding legal constraint. This paper considers the strategic use that upstream firms can make of Illinois Brick to shield themselves from private damages claims. In a repeated game setting, we find that Illinois Brick may facilitate upstream firms in engaging tacitly in collusive arrangements with concealed side-payments to discourage their direct purchasers from filing suit. An example is given of such an ‘Illinois Wall’, in which downstream firms are given part of the upstream cartel profits through a symmetric rationing of their inputs at low prices. Interestingly enough, the Illinois Wall is found to be particularly stable when competition is relatively strong at both the up- and the downstream level.
Keywords: microeconomics ; 
Series: Research Memoranda
Creation-Date: 2003
Number: 027
File-URL: http://digitalarchive.maastrichtuniversity.nl/fedora/objects/guid:a2a0853c-6bc5-4ea0-afb7-467bfed66df5/datastreams/ASSET1/content
File-Format: application/pdf
File-Size: 276483
Handle: RePEc:unm:umamet:2003027