Andrew Young and William Shughart II have posted an interesting paper (forthcoming in Public Choice) entitled “The Consequences of the U.S. DOJ’s Antitrust Activities: A Macroeconomic Perspective.” Here’s the abstract:
Do the antitrust law enforcement activities of the US Department of Justice act as exogenous “technology shocksâ€, an essential element of real business cycle theory that hitherto has eluded direct empirical corroboration, or as “markup shocks†limiting market power and promoting economic expansion? We analyze annual time series data from 1947 to 2003 on three measures of federal antitrust intervention: the ratio of the Antitrust Division’s budgetary expenditures to GDP as well as the numbers of civil and criminal antitrust cases instituted. The evidence suggests that changes in the levels of these policy variables act like negative technology shocks to productivity growth. Moreover, the negative effects are found to be transitory; antitrust policy generates no subsequent offsetting (net) increases in productivity.
This paper adds to a substantial literature attempting to quantify the impact of antitrust enforcement. For a contrary perspective in favor of antitrust enforcement, see Jonathan Baker, The Case for Antitrust Enforcement (17 J. Econ. Persps. 27 (Fall 2003)).