Organizational Form and Enforcement Innovation

George Mason Law & Economics Research Paper No. 23-20

Antitrust Law Journal, Vol. 85 No. 2 (2023)

43 Pages Posted: 9 Nov 2023

See all articles by Luke M. Froeb

Luke M. Froeb

Vanderbilt University - Owen Graduate School of Management

Bruce H. Kobayashi

George Mason University - Antonin Scalia Law School

John M. Yun

George Mason University - Antonin Scalia Law School

Date Written: November 7, 2023

Abstract

In this article, we examine one mechanism through which enforcement innovation occurs and is passed into practice at the U.S. antitrust agencies. Our main thesis is that agency economists are uniquely situated to produce, adapt, and disseminate new methodologies that improve enforcement accuracy because of the multiple and conflicting roles they play. Agency economists are trained in academic PhD programs to value methodology above application, and to read and publish in academic journals. They know how to narrow questions, so that they can be answered precisely, using theoretical and/or empirical models. But when they arrive at the agencies, these economists trained in academic PhD programs are thrust into decision-making roles where they must render judgments on messy, real-world cases, typically with imperfect knowledge, and often in conflict with agency attorneys, political appointees, and/or the economists and attorneys who appear on behalf of parties. How to manage this process in a way that produces growth (useful innovation) is a primary institutional challenge for the antitrust agencies.

We focus on the organizational structure of the U.S. antitrust agencies with an eye toward isolating the factors that encourage or discourage the development and application of useful, innovative economic tools. Specifically, we examine how the relationship between academia and the agencies and the dual responsibilities of research and casework serve to encourage what has become known as “enforcement R&D,” the development and application of new methodologies for screening and evaluating mergers, and for quantifying the expected harm to competition of various behaviors.

Note: Copyright 2023 American Bar Association. Reproduced by permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

Keywords: antitrust law, antitrust economics, Federal Trade Commission, Department of Justice Antitrust Division, agency economists, enforcement innovation, economic research, optimal enforcement, merger simulation, merger guidelines, Bureau of Economics (BE), Economic Analysis Group (EAG)

JEL Classification: A11, A12, B4, H11, K21, L1, L4

Suggested Citation

Froeb, Luke M. and Kobayashi, Bruce H. and Yun, John M., Organizational Form and Enforcement Innovation (November 7, 2023). George Mason Law & Economics Research Paper No. 23-20, Antitrust Law Journal, Vol. 85 No. 2 (2023), Available at SSRN: https://ssrn.com/abstract=4626034

Luke M. Froeb

Vanderbilt University - Owen Graduate School of Management ( email )

401 21st Avenue South
Nashville, TN 37203
United States
615-322-9057 (Phone)
615-343-7177 (Fax)

Bruce H. Kobayashi

George Mason University - Antonin Scalia Law School ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-8034 (Phone)
703-993-8088 (Fax)

HOME PAGE: http://mason.gmu.edu/~bkobayas

John M. Yun (Contact Author)

George Mason University - Antonin Scalia Law School ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

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