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Regime Shift in Antitrust Laws, Economics and Enforcement

Vivek Ghosal

Rensselaer Polytechnic Institute; Georgia Institute of Technology; Center for Economic Studies and Ifo Institute for Economic Research (CESifo)

May 10, 2011

Journal of Competition Law and Economics 7, 2011, pages 733 – 774.

This paper empirically models the longer-run deep-seated shift in intellectual thinking that followed the Chicago School's criticism of the older antitrust doctrine, the shorter-run driving forces related to switches of the political party in power, merger waves, changes in economic activity and the level of funding and quantifies their impact on enforcement by the Antitrust Division of the U.S. Department of Justice over the period 1958-2002. The key findings are: (1) a distinct regime-shift in antitrust enforcement during the 1970s and, post-regime-shift, there has been a marked compositional change with a quantitatively large increase (decrease) in criminal (civil) antitrust court cases initiated; (2) post-regime-shift, there appears to be a change in the role played by politics with Republicans initiating more (less) criminal (civil) court cases than Democrats and the estimated quantitative effects are large; (3) disaggregating the total number of court cases into the main categories under which they are initiated (price-fixing, mergers, monopolization and restraints-of-trade) shows that individual types of cases have widely differing responses to changes in the driving forces; and (4) in a horse-race between the regime-shift and political effect on one side and the remaining variables on the other, the former forces win hands-down in explaining broad shifts in enforcement. Modeling the longer-run shift and disaggregating the court cases emerge as crucial to gaining insights into the intertemporal shifts in enforcement. The paper elaborates on the causes for the shift in enforcement and on the effectiveness of antitrust.

Number of Pages in PDF File: 30

Keywords: Antitrust enforcement, regime-shift, politics, supreme court, effectiveness

JEL Classification: L40, K00

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Date posted: October 10, 2007 ; Last revised: December 27, 2014

Suggested Citation

Ghosal, Vivek, Regime Shift in Antitrust Laws, Economics and Enforcement (May 10, 2011). Journal of Competition Law and Economics 7, 2011, pages 733 – 774.. Available at SSRN: https://ssrn.com/abstract=1020448 or http://dx.doi.org/10.2139/ssrn.1020448

Contact Information

Vivek Ghosal (Contact Author)
Rensselaer Polytechnic Institute ( email )
110 8th Street
Troy, NY 12180
United States
518-276-3868 (Phone)
HOME PAGE: http://www.economics.rpi.edu/pl/people/ghosal
Georgia Institute of Technology ( email )
School of Economics
221 Bobby Dodd Way
Atlanta, GA 30332
United States
404-894-4910 (Phone)
HOME PAGE: http://www.econ.gatech.edu/people/faculty/ghosal/
Center for Economic Studies and Ifo Institute for Economic Research (CESifo)
Poschinger Str. 5
HOME PAGE: http://www.cesifo.de

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