The Deterrence Effects of US Merger Policy Instruments
We estimate the deterrence effects of US merger policy instruments with respect to the composition and frequency of future merger notifications. Data from the Annual Reports by the US Department of Justice and Federal Trade Commission allow industry-based measures over the 1986--99 period of the conditional probabilities for eliciting investigations, challenges, prohibitions, court wins, and court losses: Deterrence variables akin to the traditional conditional probabilities from the economics of crime literature. We find the challenge rate to robustly deter future horizontal (both relative and absolute) merger activity, and the court-loss rate to moderately affect absolute levels of horizontal-merger activity; however, the investigation rate, prohibition rate, and court-win rate do not significantly deter future horizontal mergers. Accordingly, the conditional probability of eliciting an antitrust challenge (i.e. remedies and prohibitions) is unique among the different merger policy instruments as it yields a robust deterrence effect. (JEL L40, L49, K21) The Author 2012. Published by Oxford University Press on behalf of Yale University. All rights reserved. For Permissions, please email: email@example.com, Oxford University Press.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 29 (2013)
Issue (Month): 5 (October)
|Contact details of provider:|| Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK|
Fax: 01865 267 985
Web page: http://jleo.oupjournals.org/
|Order Information:||Web: http://www.oup.co.uk/journals|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alvtn Klevorick, 1995. "The Economic Theory of Crime and the Problems of a Society in Transition," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 2(2), pages 345-357.
- Arellano, Manuel & Bover, Olympia, 1995.
"Another look at the instrumental variable estimation of error-components models,"
Journal of Econometrics,
Elsevier, vol. 68(1), pages 29-51, July.
- M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
- Jo Seldeslachts & Joseph A. Clougherty & Pedro Pita Barros, 2009. "Settle for Now but Block for Tomorrow: The Deterrence Effects of Merger Policy Tools," Journal of Law and Economics, University of Chicago Press, vol. 52(3), pages 607-634, 08.
- Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
- Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 169-169.
- Albert Banal‐Estañol & Paul Heidhues & Rainer Nitsche & Jo Seldeslachts, 2010. "Screening And Merger Activity," Journal of Industrial Economics, Wiley Blackwell, vol. 58(4), pages 794-817, December.
- Banal-Estanol, Albert & Heidhues, Paul & Nitsche, Rainer & Seldeslachts, Jo, 2009. "Screening and Merger Activity," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 270, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Paul R. Zimmerman, 2009. "Statistical Variability and the Deterrent Effect of the Death Penalty," American Law and Economics Review, Oxford University Press, vol. 11(2), pages 370-398.
- Jonathan B. Baker, 2003. "The Case for Antitrust Enforcement," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 27-50, Fall.
- Eckbo, B Espen & Wier, Peggy, 1985. "Antimerger Policy under the Hart-Scott-Rodino Act: A Reexamination of the Market Power Hypothesis," Journal of Law and Economics, University of Chicago Press, vol. 28(1), pages 119-149, April.
- Hashem Dezhbakhsh & Paul H. Rubin & Joanna M. Shepherd, 2003. "Does Capital Punishment Have a Deterrent Effect? New Evidence from Postmoratorium Panel Data," American Law and Economics Review, Oxford University Press, vol. 5(2), pages 344-376, August.
- Hashem Dezhbakhsh & Paul H. Rubin & Joanna M. Shepherd, 2001. "Does Capital Punishment Have a Deterrent Effect? New Evidence from Post-moratorium Panel Data," Emory Economics 0101, Department of Economics, Emory University (Atlanta).
- Doern, G. Bruce & Wilks, Stephen (ed.), 1996. "Comparative Competition Policy: National Institutions in a Global Market," OUP Catalogue, Oxford University Press, number 9780198280620.
- Paul R. Zimmerman, 2006. "The Deterrent Effect of Alternative Execution Methods," American Journal of Economics and Sociology, Wiley Blackwell, vol. 65(4), pages 909-941, October.
- Donohue, John J & Wolfers, Justin, 2006. "Uses and Abuses of Empirical Evidence in the Death Penalty Debate," CEPR Discussion Papers 5493, C.E.P.R. Discussion Papers.
- Donohue III, John J. & Wolfers, Justin, 2006. "Uses and Abuses of Empirical Evidence in the Death Penalty Debate," IZA Discussion Papers 1949, Institute for the Study of Labor (IZA).
- John J. Donohue III & Justin Wolfers, 2006. "Uses and Abuses of Empirical Evidence in the Death Penalty Debate," NBER Working Papers 11982, National Bureau of Economic Research, Inc.
- William Greene, 2004. "The behaviour of the maximum likelihood estimator of limited dependent variable models in the presence of fixed effects," Econometrics Journal, Royal Economic Society, vol. 7(1), pages 98-119, 06.
- Michael Gort, 1969. "An Economic Disturbance Theory of Mergers," The Quarterly Journal of Economics, Oxford University Press, vol. 83(4), pages 624-642.
- Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 249-275.
- Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
- Golbe, Devra L & White, Lawrence J, 1993. "Catch a Wave: The Time Series Behavior of Mergers," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 493-499, August.
- Robert W. Crandall & Clifford Winston, 2005. "Does antitrust policy improve consumer welfare? Assessing the evidence," Chapters,in: Governments, Competition and Utility Regulation, chapter 2 Edward Elgar Publishing.
- 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.
- Cameron, Samuel, 1994. "A review of the econometric evidence on the effects of capital punishment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 23(1-2), pages 197-214.
- Mathur, Vijay K, 1978. "Economics of Crime: An Investigation of the Deterrent Hypothesis for Urban Areas," The Review of Economics and Statistics, MIT Press, vol. 60(3), pages 459-466, August.
- Paul L. Joskow, 2002. "Transaction Cost Economics, Antitrust Rules, and Remedies," Journal of Law, Economics and Organization, Oxford University Press, vol. 18(1), pages 95-116, April.
- John Kwoka, 1999. "Commitment to Competition: An Assessment of Antitrust Agency Budgets since 1970," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 14(4), pages 295-302, June.
- Mocan, H Naci & Gittings, R Kaj, 2003. "Getting Off Death Row: Commuted Sentences and the Deterrent Effect of Capital Punishment," Journal of Law and Economics, University of Chicago Press, vol. 46(2), pages 453-478, October.
- Dale Cloninger & Roberto Marchesini, 2006. "Execution moratoriums, commutations and deterrence: the case of Illinois," Applied Economics, Taylor & Francis Journals, vol. 38(9), pages 967-973.
- Cameron, Samuel, 1988. "The Economics of Crime Deterrence: A Survey of Theory and Evidence," Kyklos, Wiley Blackwell, vol. 41(2), pages 301-323.
- Rhodes-Kropf, Matthew & Robinson, David T. & Viswanathan, S., 2005. "Valuation waves and merger activity: The empirical evidence," Journal of Financial Economics, Elsevier, vol. 77(3), pages 561-603, September.
- Malcolm Coate, 2005. "Empirical Analysis of Merger Enforcement Under the 1992 Merger Guidelines," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 27(4), pages 279-301, December.
- Long, William F & Schramm, Richard & Tollison, Robert D, 1973. "The Economic Determinants of Antitrust Activity," Journal of Law and Economics, University of Chicago Press, vol. 16(2), pages 351-364, October.
- Passell, Peter & Taylor, John B, 1977. "The Deterrent Effect of Capital Punishment: Another View," American Economic Review, American Economic Association, vol. 67(3), pages 445-451, June.
- Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
- Tom Doan, "undated". "RATS program to replicate Arellano-Bond 1991 dynamic panel," Statistical Software Components RTZ00169, Boston College Department of Economics.
- Ehrlich, Isaac, 1973. "Participation in Illegitimate Activities: A Theoretical and Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 521-565, May-June.
- Eckbo, B Espen, 1992. " Mergers and the Value of Antitrust Deterrence," Journal of Finance, American Finance Association, vol. 47(3), pages 1005-1029, July.
- Andrade, Gregor & Stafford, Erik, 2004. "Investigating the economic role of mergers," Journal of Corporate Finance, Elsevier, vol. 10(1), pages 1-36, January. Full references (including those not matched with items on IDEAS)