The Case for Antitrust Enforcement

Abstract:     
This paper provides evidence of the necessity and success of antitrust enforcement. It begins with examples of socially beneficial antitrust challenges by the federal antitrust agencies to price-fixing and other forms of collusion; to mergers that appear likely to harm competition; and to monopolists and others that use anticompetitive exclusionary practices to obtain or maintain their market power. It then reviews systematic empirical evidence on the value of antitrust derived from informal experiments involving the behavior of U.S. firms during periods without effective antitrust enforcement, and the behavior of firms across different national antitrust regimes. Overall, it concludes, the benefits of antitrust enforcement to consumers and social welfare - particularly in deterring the harms from anticompetitive conduct across the economy - appear to be far larger than what the government spends on antitrust enforcement and firms spend directly or indirectly on antitrust compliance.

Number of Pages in PDF File: 55

JEL Classification: L4

working papers series