Policy Innovations, Political Preferences, and Cartel Prosecutions

31 Pages Posted: 12 Sep 2015 Last revised: 17 May 2016

See all articles by Vivek Ghosal

Vivek Ghosal

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

D. Daniel Sokol

USC Gould School of Law; USC Marshall School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: September 14, 2015


While price-fixing cartel prosecutions have received significant attention, the policy determinants and the political preferences that guide such antitrust prosecutions remain understudied. We empirically examine the intertemporal shifts in U.S. antitrust cartel prosecutions during the period 1969-2013. This period has seen substantive policy innovations with increasing penalties related to fines and jail terms. There appear to be four distinct cartel policy regimes: pre-1978, 1978-1992, 1993-2003, and 2004-2013. Our empirical estimates show significant variation in the number of cartels prosecuted and the penalties imposed across the policy regimes. The more recent regimes are characterized by far fewer cartels prosecuted, but with substantially higher penalties levied on firms and individuals. While effective deterrence is one explanation for these patterns, we are more inclined to conclude that US cartel enforcement has seen an underlying shift away from focusing on smaller cartels to larger and multinational firms. In terms of political effects, our results reveal no clear inter-political party effect on cartel prosecutions, but there appear to be interesting intra-political party effects. We find that particular Presidencies matter for cartel prosecutions, and variation across Presidential administrations led to marked shifts in the total number of cartels prosecuted. Overall, the shifts in the number of cartels prosecuted and penalties levied portray changing policy priorities and a search for the optimal enforcement design to curtail one of the clearest sources of welfare loss, collusion.

Keywords: price-fixing, collusion, cartels, antitrust, enforcement, prosecutions, leniency, fines, jail terms, Antitrust Amendments Act, ACPERA, politics, business cycles

JEL Classification: K21, L41, L13, L11

Suggested Citation

Ghosal, Vivek and Sokol, D. Daniel, Policy Innovations, Political Preferences, and Cartel Prosecutions (September 14, 2015). Review of Industrial Organization, Vol. 48, No. 4, 2016, University of Florida Levin College of Law Research Paper No. 16-17, Available at SSRN: https://ssrn.com/abstract=2659486 or http://dx.doi.org/10.2139/ssrn.2659486

Vivek Ghosal (Contact Author)

Rensselaer Polytechnic Institute ( email )

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HOME PAGE: http://www.economics.rpi.edu/pl/people/ghosal

Center for Economic Studies and Ifo Institute for Economic Research (CESifo)

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HOME PAGE: http://www.cesifo.de

D. Daniel Sokol

USC Gould School of Law ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
United States

USC Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States

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