A Theoretical and Empirical Analysis of Public and Private Antitrust Enforcement
Rearden, John Joseph
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https://hdl.handle.net/2142/70769
Description
Title
A Theoretical and Empirical Analysis of Public and Private Antitrust Enforcement
Author(s)
Rearden, John Joseph
Issue Date
1985
Department of Study
Economics
Discipline
Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Commerce-Business
Abstract
Past empirical approaches to the study of public antitrust agencies' case selection theorized that the agencies should rationally bring more cases when the benefits of antitrust cases, reductions in excess profits, are high. However, these studies ignore the role of private enforcement. Other theoretical studies have considered both public and private antitrust enforcement, but they have used a comparative approach that implicitly assumes that only one mode of enforcement is operating at a time.
The thesis combines these two areas of literature. A theoretical model combines public and private antitrust enforcement. Public enforcers minimize the sum of deadweight loss and public enforcement costs subject to private enforcers zero-profit constraint. The different enforcement types affect each other in several different ways. Although comparative statics in the full model were inconclusive, the marginal conditions show that private enforcement reduces the social welfare from public enforcement unless the number of offenses is highly elastic with respect to the number of public cases.
A simultaneous equations model was estimated to consider both public and private antitrust enforcement. When the number of public civil antitrust suits is the dependent variable, the number of private suits tends to be a significant, positive influence. Higher levels of monopoly power, as measured by Tobin's q, tended to cause more public antitrust suits, contrary to earlier single equation studies. Interestingly, the number of public civil cases tended to reduce the number of private cases.
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