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Are there regimes of antitrust enforcement? An empirical analysis

  • Andrew J. Holliday
  • Gregory P. Hopper
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    In this paper, the authors propose a new index of antitrust enforcement. The index is compiled from quarterly data from the Department of Justice from 1890 to 1989 and is designed to reflect the relative influence of variables that have deterrent effects. The authors use Hamilton's (1989, 1990) regime-switching technique to estimate a model in which the enforcement index follows a regime-specific AR(1) process. The authors find evidence of long-lived regimes. The high enforcement regime, which lasted from about 1910 to the mid-1960s, produced enforcement that was, on average, almost twice as high as the low enforcement regime. In particular, the Reagan years were not a time of transition to low antitrust enforcement, as is commonly claimed. Rather, the transition to a low enforcement regime had taken place some 15 years earlier.

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    File URL: http://www.philadelphiafed.org/research-and-data/publications/working-papers/1996/wp96-21.pdf
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    Paper provided by Federal Reserve Bank of Philadelphia in its series Working Papers with number 96-21.

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    Date of creation: 1996
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    Handle: RePEc:fip:fedpwp:96-21
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    1. Francis X. Diebold & Joon-Haeng Lee & Gretchen C. Weinbach, 1993. "Regime switching with time-varying transition probabilities," Working Papers 93-12, Federal Reserve Bank of Philadelphia.
    2. Block, Michael Kent & Nold, Frederick Carl, 1981. "The Deterrent Effect of Antitrust Enforcement," Journal of Political Economy, University of Chicago Press, vol. 89(3), pages 429-45, June.
    3. Davidson, Russell & MacKinnon, James G, 1981. "Several Tests for Model Specification in the Presence of Alternative Hypotheses," Econometrica, Econometric Society, vol. 49(3), pages 781-93, May.
    4. Garbade, Kenneth D & Silber, William L & White, Lawrence J, 1982. "Market Reaction to the Filing of Antitrust Suits: An Aggregate and Cross-Sectional Analysis," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 686-91, November.
    5. Breit, William & Elzinga, Kenneth G, 1985. "Private Antitrust Enforcement: The New Learning," Journal of Law and Economics, University of Chicago Press, vol. 28(2), pages 405-43, May.
    6. Stigler, George J, 1970. "The Optimum Enforcement of Laws," Journal of Political Economy, University of Chicago Press, vol. 78(3), pages 526-36, May-June.
    7. Eckbo, B. Espen, 1983. "Horizontal mergers, collusion, and stockholder wealth," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 241-273, April.
    8. Choi, Dosoung & Philippatos, George C, 1983. "Financial Consequences of Antitrust Enforcement," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 501-06, August.
    9. Asch, Peter, 1975. "The Determinants and Effects of Antitrust Activity," Journal of Law and Economics, University of Chicago Press, vol. 18(2), pages 575-81, October.
    10. Hamilton, James D., 1990. "Analysis of time series subject to changes in regime," Journal of Econometrics, Elsevier, vol. 45(1-2), pages 39-70.
    11. Siegfried, John J, 1975. "The Determinants of Antitrust Activity," Journal of Law and Economics, University of Chicago Press, vol. 18(2), pages 559-74, October.
    12. Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 169.
    13. Baker, Jonathan B, 1988. "Private Information and the Deterrent Effect of Antitrust Damage Remedies," Journal of Law, Economics and Organization, Oxford University Press, vol. 4(2), pages 385-408, Fall.
    14. Ellert, James C, 1976. "Mergers, Antitrust Law Enforcement and Stockholder Returns," Journal of Finance, American Finance Association, vol. 31(2), pages 715-32, May.
    15. Besanko, David & Spulber, Daniel F, 1989. "Antitrust Enforcement under Asymmetric Information," Economic Journal, Royal Economic Society, vol. 99(396), pages 408-25, June.
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