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Industrial Concentration under the Rule of Reason

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  • Sam Peltzman

Abstract

Robert Bork thought that antitrust restrictions on horizontal mergers should be confined to already highly concentrated markets. Actual policy, which had been much more restrictive, adopted Bork's recommendation in the early 1980s. This paper examines the connection between this policy shift and concentration in the manufacturing sector. I find that concentration, which had been unchanged on average for all of the 20th century, began rising at the same time that merger policy changed. Concentration has increased steadily over the entire post-Bork period. The increase has been especially pronounced in consumer goods industries, which were already becoming more concentrated in the pre-Bork era. I find little difference in the underlying trends between already highly concentrated industries and the rest of manufacturing. Neither slowing growth in domestic manufacturing nor growing imports seem sufficient to explain the increased concentration.

Suggested Citation

  • Sam Peltzman, 2014. "Industrial Concentration under the Rule of Reason," Journal of Law and Economics, University of Chicago Press, vol. 57(S3), pages 101-120.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/675719
    DOI: 10.1086/675719
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    References listed on IDEAS

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    1. Unknown & Sam Peltzman & Dennis Carlton, 2010. "Introduction to Stigler’s Theory of Oligopoly," CPI Journal, Competition Policy International, vol. 6.
    2. George Stigler, 2010. "Theory of Oligopoly," CPI Journal, Competition Policy International, vol. 6.
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    Cited by:

    1. Kwon, Spencer Y. & Ma, Yueran & Zimmermann, Kaspar, 2022. "100 years of rising corporate concentration," SAFE Working Paper Series 359, Leibniz Institute for Financial Research SAFE.
    2. Dennis L. Weisman, 2020. "Complementarities as an antitrust defense," Competition and Regulation in Network Industries, , vol. 21(4), pages 344-366, December.
    3. Joel Stiebale & Florian Szücs, 2022. "Mergers and market power: evidence from rivals' responses in European markets," RAND Journal of Economics, RAND Corporation, vol. 53(4), pages 678-702, December.
    4. Lamoreaux, N., 2019. "The Problem of Bigness: From Standard Oil to Google," Cambridge Working Papers in Economics 1963, Faculty of Economics, University of Cambridge.
    5. Simcha Barkai, 2020. "Declining Labor and Capital Shares," Journal of Finance, American Finance Association, vol. 75(5), pages 2421-2463, October.
    6. Thomas G. Wollmann, 2020. "How to Get Away with Merger: Stealth Consolidation and Its Effects on US Healthcare," NBER Working Papers 27274, National Bureau of Economic Research, Inc.
    7. Bobeica, Elena & Ciccarelli, Matteo & Vansteenkiste, Isabel, 2021. "The changing link between labor cost and price inflation in the United States," Working Paper Series 2583, European Central Bank.
    8. Geoff Weir, 2018. "Wage Growth Puzzles and Technology," RBA Research Discussion Papers rdp2018-10, Reserve Bank of Australia.
    9. Yeh, Yin-Hua & Liao, Chen-Chieh, 2020. "The impact of product market competition and internal corporate governance on family succession," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
    10. Cavalleri, Maria Chiara & Eliet, Alice & McAdam, Peter & Petroulakis, Filippos & Soares, Ana & Vansteenkiste, Isabel, 2019. "Concentration, market power and dynamism in the euro area," Working Paper Series 2253, European Central Bank.
    11. Shapiro, Carl, 2018. "Antitrust in a time of populism," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 714-748.

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