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Antitrust and Regulation

In: Economic Regulation and Its Reform: What Have We Learned?

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  • Dennis W. Carlton
  • Randal C. Picker

Abstract

Since the passage of the Interstate Commerce Act (1897) and the Sherman Act (1890), regulation and antitrust have operated as competing mechanisms to control competition. Regulation produced cross-subsidies and favors to special interests, but specified prices and rules of mandatory dealing. Antitrust promoted competition without favoring special interests, but couldn't formulate rules for particular industries. The deregulation movement reflected the relative competencies of antitrust and regulation. Antitrust and regulation can also be viewed as complements in which regulation and antitrust assign control of competition to courts and regulatory agencies based on their relative strengths. Antitrust also can act as a constraint on what regulators can do. This paper uses the game-theoretic framework of political bargaining and the historical record of antitrust and regulation to establish and illustrate these points.

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This chapter was published in:

  • Nancy L. Rose, 2014. "Economic Regulation and Its Reform: What Have We Learned?," NBER Books, National Bureau of Economic Research, Inc, number rose05-1, octubre-d.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 12565.

    Handle: RePEc:nbr:nberch:12565

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    1. Feitler, Jane N. & Corsi, Thomas M. & Grimm, Curtis M., 1997. "Measuring firm strategic change in the regulated and deregulated motor carrier industry: An 18 year evaluation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 33(3), pages 159-169, September.
    2. repec:reg:wpaper:237 is not listed on IDEAS
    3. repec:reg:rpubli:237 is not listed on IDEAS
    4. Pindyck, Robert S., 2005. "Sunk Costs and Real Options in Antitrust," Working papers 18233, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    5. Rose, Nancy L, 1987. "Labor Rent Sharing and Regulation: Evidence from the Trucking Industry," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1146-78, December.
    6. Bittlingmayer, George, 1985. "Did Antitrust Policy Cause the Great Merger Wave?," Journal of Law and Economics, University of Chicago Press, vol. 28(1), pages 77-118, April.
    7. Daniel, Timothy P & Kleit, Andrew N, 1995. "Disentangling Regulatory Policy: The Effects of State Regulations on Trucking Rates," Journal of Regulatory Economics, Springer, vol. 8(3), pages 267-84, November.
    8. Ivaldi, Marc & McCullough, Gerard, 2005. "Welfare Trade-Offs in US Rail Mergers," CEPR Discussion Papers 5000, C.E.P.R. Discussion Papers.
    9. Morris Fiorina, 1982. "Legislative choice of regulatory forms: Legal process or administrative process?," Public Choice, Springer, vol. 39(1), pages 33-66, January.
    10. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    11. Dennis W. Carlton & Alan S. Frankel & Elisabeth M. Landes, 2004. "The Control of Externalities in Sports Leagues: An Analysis of Restrictions in the National Hockey League," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages S268-S288, February.
    12. Moore, Thomas Gale, 1978. "The Beneficiaries of Trucking Regulation," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 327-43, October.
    13. Bruce L. Benson & M. L. Greenhut, 1987. "Interest Groups and the Antitrust Paradox," Cato Journal, Cato Journal, Cato Institute, vol. 6(3), pages 801-817, Winter.
    14. William M. Landes & Richard A. Posner, 1978. "Adjudication as a Private Good," NBER Working Papers 0263, National Bureau of Economic Research, Inc.
    15. Michael H. Belzer, 1995. "Collective bargaining after deregulation: Do the Teamsters still count?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 48(4), pages 636-655, July.
    16. Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August.
    17. James Peoples, 1998. "Deregulation and the Labor Market," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 111-130, Summer.
    18. Richard A. Posner, 1974. "Theories of Economic Regulation," NBER Working Papers 0041, National Bureau of Economic Research, Inc.
    19. Gilligan, Thomas W & Marshall, William J & Weingast, Barry R, 1989. "Regulation and the Theory of Legislative Choice: The Interstate Commerce Act of 1887," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 35-61, April.
    20. Dennis W. Carlton, 2001. "A General Analysis of Exclusionary Conduct and Refusal to Deal - Why Aspen and Kodak are Misguided," NBER Working Papers 8105, National Bureau of Economic Research, Inc.
    21. Pirrong, Stephen Craig, 1992. "An Application of Core Theory to the Analysis of Ocean Shipping Markets," Journal of Law and Economics, University of Chicago Press, vol. 35(1), pages 89-131, April.
    22. Davis, David E & Wilson, Wesley W, 1999. "Deregulation, Mergers, and Employment in the Railroad Industry," Journal of Regulatory Economics, Springer, vol. 15(1), pages 5-22, January.
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    Citations

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    Cited by:
    1. Dennis W. Carlton, 2007. "Mergers in Regulated Industries: Electricity," EAG Discussions Papers 200716, Department of Justice, Antitrust Division.
    2. Dennis W. Carlton, 2007. "Does Antitrust Need to be Modernized?," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 155-176, Summer.
    3. J.A. den Hertog, 2010. "Review of economic theories of regulation," Working Papers 10-18, Utrecht School of Economics.
    4. Carletti, Elena & Hartmann, Philipp & Ongena, Steven, 2007. "The economic impact of merger control: what is special about banking?," Working Paper Series 0786, European Central Bank.
    5. repec:reg:wpaper:606 is not listed on IDEAS
    6. Christian Jaag & Urs Trinkner, 2009. "A General Framework for Regulation and Liberalization in Network Industries," Working Papers 0016, Swiss Economics.
    7. Nishida, Mitsukuni & Gil, Ricard, 2014. "Regulation, enforcement, and entry: Evidence from the Spanish local TV industry," International Journal of Industrial Organization, Elsevier, vol. 32(C), pages 11-23.
    8. Joan Ramon Borrell & Juan Luis Jiménez, 2008. "The drivers of antitrust effectiveness," Hacienda Pública Española, IEF, vol. 185(2), pages 69-88, July.
    9. Morris E. Morkre & Dean Spinanger & Lien H. Tran, 2008. "Are Unfair Import Laws Unfair to Developing Countries: Evidence from U.S. Antidumping Actions 1990-2004," Kiel Working Papers 1438, Kiel Institute for the World Economy.
    10. Dennis W. Carlton & Ken Heyer, 2008. "Appropriate Antitrust Policy Towards Single-Firm Conduct," EAG Discussions Papers 200802, Department of Justice, Antitrust Division.

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