The Dynamic Effects of Antitrust Policy on Growth and Welfare

Laurent Cavenaile, Murat Celik and Xu Tian

Journal of Monetary Economics, 2021, vol. 121, issue C, 42-59

Abstract: To study the dynamic effects of antitrust policy on growth and welfare, we develop and estimate the first general equilibrium model with Schumpeterian innovation, oligopolistic product market competition, and endogenous M&A decisions. The estimated model reveals that: (1) Existing policies generate gains in growth and welfare. (2) Strengthening antitrust enforcement could deliver substantially higher gains. (3) The dynamic long-run effects of antitrust policy on social welfare are an order of magnitude larger than the static gains from higher allocative efficiency in production. (4) Current HHI-based antitrust rules leave the majority of anticompetitive acquisitions undetected, highlighting the need for alternative guidelines.

Keywords: Antitrust policy; Mergers and acquisitions; Innovation; Growth; Social welfare (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:121:y:2021:i:c:p:42-59

DOI: 10.1016/j.jmoneco.2021.04.011

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