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Discovering Cartels: Dynamic Interrelationships between Civil and Criminal Antitrust Investigations

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Author Info
Ghosal, Vivek

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Abstract

This paper focuses on the genesis, taxonomy and timeline of U.S. criminal antitrust investigations, and uses time-series data on enforcement to examine the interrelationships between the various criminal enforcement variables as well as the linkages between criminal and civil enforcement. The key findings are: (1) there appears to be considerable dynamic interplay between the criminal variables. For example, an increase in grand jury investigations or criminal cases initiated or the number of individuals or firms convicted generates increases in most of these (endogenous) variables in future periods. A broad conclusion that can be drawn is that information unearthed during a given criminal investigation and prosecution often reveals information about other conspiracies leading to future investigations and prosecutions; (2) an increase in civil enforcement leads to future increases in the criminal cases and firms and individuals convicted. This suggests that information gleaned during civil investigations, such as mergers or monopolization cases, may reveal information about collusive behavior in markets leading to criminal investigations and prosecutions; and (3) criminal enforcement follows a counter-cyclical pattern with the number of criminal cases prosecuted increasing following an economic downturn. We relate this to the literature which points to cartel instability during economic downturns. Overall, our results point to complementarities in the investigative process within different facets of criminal investigations as well as between criminal and civil investigations.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 5499.

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Date of creation: Dec 2006
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Handle: RePEc:pra:mprapa:5499

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Related research
Keywords: Cartels Antitrust Enforcement Prosecution Business Cycles

Other versions of this item:

Find related papers by JEL classification:
L00 - Industrial Organization - - General - - - General
L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
B00 - Schools of Economic Thought and Methodology - - General - - - General
K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
M20 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - General

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References listed on IDEAS
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  1. Dick, Andrew R, 1996. "When Are Cartels Stable Contracts?," Journal of Law & Economics, University of Chicago Press, vol. 39(1), pages 241-83, April.
  2. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January. [Downloadable!] (restricted)
  3. Margaret C. Levenstein & Valerie Y. Suslow, 2006. "What Determines Cartel Success?," Journal of Economic Literature, American Economic Association, vol. 44(1), pages 43-95, March. [Downloadable!] (restricted)
  4. Ghosal, Vivek, 2007. "Regime Shift in Antitrust," MPRA Paper 5460, University Library of Munich, Germany. [Downloadable!]
  5. John Connor, 2006. "Effectiveness of Antitrust Sanctions on Modern International Cartels," Journal of Industry, Competition and Trade, Springer, vol. 6(3), pages 195-223, December. [Downloadable!] (restricted)
  6. Block, Michael K & Feinstein, Jonathan S, 1986. "The Spillover Effect of Antitrust Enforcement," The Review of Economics and Statistics, MIT Press, vol. 68(1), pages 122-31, February. [Downloadable!] (restricted)
  7. Joe Chen & Joseph E. Harrington, Jr., 2005. "Impact of the Corporate Leniency Program on Cartel Formation and the Cartel Price Path," CIRJE F-Series CIRJE-F-358, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
  8. Robert W. Crandall & Clifford Winston, 2003. "Does Antitrust Policy Improve Consumer Welfare? Assessing the Evidence," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 3-26, Fall. [Downloadable!] (restricted)
  9. Green, Edward J & Porter, Robert H, 1984. "Noncooperative Collusion under Imperfect Price Information," Econometrica, Econometric Society, vol. 52(1), pages 87-100, January. [Downloadable!] (restricted)
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  10. Ghosal, Vivek & Gallo, Joseph, 2001. "The cyclical behavior of the Department of Justice's antitrust enforcement activity," International Journal of Industrial Organization, Elsevier, vol. 19(1-2), pages 27-54, January. [Downloadable!] (restricted)
  11. Buccirossi, Paolo & Spagnolo, Giancarlo, 2006. "Optimal Fines in the Era of Whistleblowers," CEPR Discussion Papers 5465, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  12. Stock, James H & Watson, Mark W, 1996. "Evidence on Structural Instability in Macroeconomic Time Series Relations," Journal of Business & Economic Statistics, American Statistical Association, vol. 14(1), pages 11-30, January.
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  13. Slade, Margaret E., 1990. "Strategic pricing models and interpretation of price-war data," European Economic Review, Elsevier, vol. 34(2-3), pages 524-537, May. [Downloadable!] (restricted)
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  14. Jonathan B. Baker, 2003. "The Case for Antitrust Enforcement," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 27-50, Fall. [Downloadable!] (restricted)
  15. Andrews, Donald W K, 1993. "Tests for Parameter Instability and Structural Change with Unknown Change Point," Econometrica, Econometric Society, vol. 61(4), pages 821-56, July. [Downloadable!] (restricted)
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  16. Rotemberg, Julio J & Saloner, Garth, 1986. "A Supergame-Theoretic Model of Price Wars during Booms," American Economic Review, American Economic Association, vol. 76(3), pages 390-407, June. [Downloadable!] (restricted)
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