Antitrust Enforcement Increases Economic Activity

By: Simcha Barkai (ProMarket)

In collaboration with Tania Babina, Jessica Jeffers, Ezra Karger, and Ekaterina Volkova, we have conducted new research involving the meticulous collection of a comprehensive record of Department of Justice (DOJ) antitrust lawsuits spanning from 1971 to 2018. Utilizing this dataset, we have analyzed the tangible impacts of these lawsuits on economic activity. Our paper presents the inaugural systematic evidence of the genuine effects resulting from DOJ antitrust enforcement. Our findings conclusively demonstrate that antitrust enforcement amplifies economic activity, measured through factors such as employment levels, business creation, average wages, and the labor share.

Recent scholarly literature has documented a surge in market power within the U.S. and its adverse effects on overall wages, investment, and productivity. These trends have reignited interest among policymakers, researchers, and the media in the realm of competition policy and antitrust enforcement. This renewed focus on antitrust enforcement mirrors historical cycles of attention directed at anticompetitive conduct, culminating in the enactment of four key federal laws regulating such behavior, commencing with the Sherman Act in 1890. However, despite over a century of antitrust enforcement, there exists limited systematic empirical research quantifying the ramifications of antitrust enforcement on economic outcomes. An essential hurdle for empirical research in this domain is the lack of standardized data regarding antitrust enforcement actions.

Our primary source of information regarding antitrust enforcement comprises legal synopses of DOJ antitrust lawsuits, curated for legal professionals and legal scholars. These case synopses encompass all 3,055 DOJ antitrust lawsuits filed in federal courts from 1971 to 2018. A typical case synopsis is two to three paragraphs long, delineating the commencement and resolution of an antitrust lawsuit initiated by the DOJ Antitrust Division in a federal court. We diligently review these synopses, capturing a multitude of standard variables such as the alleged infringements, the district court’s name, and the case filing date. Additionally, we compile comprehensive details concerning the geography and industry associated with purported anticompetitive behavior. Specifically, we gather data specifying the seller’s location and the geographic extent of the alleged violation (ranging from local to international), and we manually align each case with a standard industry code. To ensure utmost accuracy, each case is independently reviewed and coded by two individuals, and subsequently, the entered values are compared and disagreements are resolved…

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