IDEAS home Printed from https://ideas.repec.org/p/sek/iefpro/10912816.html
   My bibliography  Save this paper

Corporate Interest in Antitrust Enforcement

Author

Listed:
  • Krisztina Antal-Pomázi

    (Center for Economic and Regional Studies, Corvinus University of Budapest)

Abstract

Antitrust enforcement is beneficial for consumers as long as they face lower prices, more alternatives to choose from, and get valid information about products and services. But what about the competing firms? Why is it good, or is it good at all for them if they are not allowed to form cartels, not allowed to become a monopoly, or not allowed to use their market power? The first part of the paper aims to answer questions like these. If we look beyond the idea of a welfare-maximizing social planner that creates competition policy in order to promote competition and put restraint on firms willing to monopolize markets, we might ask why such institutions emerge and who really benefits from them? Apart from the evident answer of consumers benefiting from lower prices, we consider the possibility of companies, or rather industries, benefiting from antitrust enforcement. In such a setting, preventing monopolization can be viewed as a service delivered by the regulating body. This service might be valuable for particular firms, but normally cannot be purchased on the market. Our paper presents a game theoretic model showing that such an effect exists under certain, sufficiently general conditions. Firms in an oligopolistic setting, prone to competitive escalation, would be willing to pay for the maintenance of an authority controlling business practices that are (considered) anti-competitive and thus preserving the status quo on the market. Finally, we test our results empirically, based on the practice of the competition authorities of the United Kingdom and the Netherlands. The data support the interest group theory of regulation and they match the predictions of our model.Acknowledgment: The present publication is the outcome of the project ?From Talent to Young Researcher project aimed at activities supporting the research career model in higher education?, identifier EFOP-3.6.3-VEKOP-16-2017-00007 co-supported by the European Union, Hungary and the European Social Fund.

Suggested Citation

  • Krisztina Antal-Pomázi, 2020. "Corporate Interest in Antitrust Enforcement," Proceedings of Economics and Finance Conferences 10912816, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iefpro:10912816
    as

    Download full text from publisher

    File URL: https://iises.net/proceedings/13th-economics-finance-conference-prague/table-of-content/detail?cid=109&iid=003&rid=12816
    File Function: First version, 2020
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    2. Dilorenzo, Thomas J., 1985. "The origins of antitrust: An interest-group perspective," International Review of Law and Economics, Elsevier, vol. 5(1), pages 73-90, June.
    3. Richard A. Posner, 1974. "Theories of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 335-358, Autumn.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michael Hantke-Domas, 2003. "The Public Interest Theory of Regulation: Non-Existence or Misinterpretation?," European Journal of Law and Economics, Springer, vol. 15(2), pages 165-194, March.
    2. Ando, Amy, 1998. "Delay on the Path to the Endangered Species List: Do Costs and Benefits Matter," RFF Working Paper Series dp-97-43-rev, Resources for the Future.
    3. repec:hal:spmain:info:hdl:2441/8527 is not listed on IDEAS
    4. Oleh Pasko, 2018. "Theories of Regulation in the Context of Modern Practice of Accounting Regulation," Oblik i finansi, Institute of Accounting and Finance, issue 2, pages 37-46, June.
    5. Daniel J. Smith & Macy Scheck, 2023. "Examining the public interest rationale for regulating whiskey with the pure food and drugs act," Public Choice, Springer, vol. 196(1), pages 85-122, July.
    6. Ray Ball, 2009. "Market and Political/Regulatory Perspectives on the Recent Accounting Scandals," Journal of Accounting Research, Wiley Blackwell, vol. 47(2), pages 277-323, May.
    7. Simshauser, P., 2020. "Merchant utilities and boundaries of the firm: vertical integration in energy-only markets," Cambridge Working Papers in Economics 2039, Faculty of Economics, University of Cambridge.
    8. Silvia Sacchetti, 2015. "Inclusive and Exclusive Social Preferences: A Deweyan Framework to Explain Governance Heterogeneity," Journal of Business Ethics, Springer, vol. 126(3), pages 473-485, February.
    9. James W. Hughes & Michael J. Moore & Edward A. Snyder, 2002. ""Napsterizing" Pharmaceuticals: Access, Innovation, and Consumer Welfare," NBER Working Papers 9229, National Bureau of Economic Research, Inc.
    10. Helland, Eric & Sykuta, Michael, 2004. "Regulation and the Evolution of Corporate Boards: Monitoring, Advising, or Window Dressing?," Journal of Law and Economics, University of Chicago Press, vol. 47(1), pages 167-193, April.
    11. repec:spo:wpmain:info:hdl:2441/8527 is not listed on IDEAS
    12. Niels J. Philipsen, 2010. "Regulation Of Liberal Professions And Competition Policy: Developments In The Eu And China," Journal of Competition Law and Economics, Oxford University Press, vol. 6(2), pages 203-231.
    13. Simshauser, Paul & Akimov, Alexandr, 2019. "Regulated electricity networks, investment mistakes in retrospect and stranded assets under uncertainty," Energy Economics, Elsevier, vol. 81(C), pages 117-133.
    14. World Bank, 2013. "Uganda - Diagnostic Trade Integration Study Update : Prepared for the Enhanced Integrated Framework," World Bank Publications - Reports 16035, The World Bank Group.
    15. Djankov, Simeon & Glaeser, Edward & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2003. "The new comparative economics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 595-619, December.
    16. repec:hal:wpspec:info:hdl:2441/8602 is not listed on IDEAS
    17. Camille Chaserant & Sophie Harnay, 2013. "The regulation of quality in the market for legal services: Taking the heterogeneity of legal services seriously," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 10(2), pages 267-291, August.
    18. Alejandro Castaneda, 2020. "Cronies, Rents, and Import Licenses: Non-tariff Trade Controls throughout Import Substitution Industrialization (ISI) in Mexico," Tiempo y Economía, Universidad de Bogotá Jorge Tadeo Lozano, vol. 7(2), pages 90-118, July.
    19. repec:spo:wpecon:info:hdl:2441/8526 is not listed on IDEAS
    20. Baum, Donald R. & Cooper, Rachel & Lusk-Stover, Oni, 2018. "Regulating market entry of low-cost private schools in Sub-Saharan Africa: Towards a theory of private education regulation," International Journal of Educational Development, Elsevier, vol. 60(C), pages 100-112.
    21. Connelly, J. Thomas & Limpaphayom, Piman & Nguyen, Hien T. & Tran, Thanh D., 2017. "A tale of two cities: Economic development, corporate governance and firm value in Vietnam," Research in International Business and Finance, Elsevier, vol. 42(C), pages 102-123.
    22. Fumitoshi Mizutani & Eri Nakamura, 2019. "Regulation, public interest, and private interest: an empirical investigation of firms in Japan," Empirical Economics, Springer, vol. 56(4), pages 1433-1454, April.
    23. Kwasi Gyau BAFFOUR AWUAH & Felix N. HAMMOND & Colin A. BOOTH & Jessica E. LAMOND, 2014. "Evolution And Development Of Urban Land Use Planning: Analysis From Human Action Theory Perspective," Theoretical and Empirical Researches in Urban Management, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 9(2), pages 35-67, May.
    24. Patrick Newman, 2018. "Revenge: John Sherman, Russell Alger and the origins of the Sherman Act," Public Choice, Springer, vol. 174(3), pages 257-275, March.

    More about this item

    Keywords

    Antitrust; Public enforcement; Monopolization; Interest groups; Anticompetitive business practices; Competitive escalation;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sek:iefpro:10912816. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klara Cermakova (email available below). General contact details of provider: https://iises.net/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.