Antitrust Enforcement Increases Economic Activity

Tania Babina, Simcha Barkai, Jessica Jeffers, Ezra Karger () and Ekaterina Volkova
Additional contact information
Tania Babina: Columbia University - Columbia Business School, Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)
Simcha Barkai: Boston College
Jessica Jeffers: HEC Paris
Ekaterina Volkova: University of Melbourne - Faculty of Business and Economics

No 1488, HEC Research Papers Series from HEC Paris

Abstract: We hand-collect and standardize information describing all 3,055 antitrust lawsuits brought by the Department of Justice (DOJ) between 1971 and 2018. Using restricted establishment-level microdata from the U.S. Census, we compare the economic outcomes of a non-tradable industry in states targeted by DOJ antitrust lawsuits to outcomes of the same industry in other states that were not targeted. We document that DOJ antitrust enforcement actions permanently increase employment by 5.4% and business formation by 4.1%. Using an event-study design, we find (1) a sharp increase in payroll that exceeds the increase in employment, meaning that DOJ antitrust enforcement increases average wages, (2) an economically smaller increase in sales that is statistically insignificant, and (3) a precise increase in the labor share. While we cannot separately measure the quantity and price of output, the increase in production inputs (employment), together with a proportionally smaller increase in sales, strongly suggests that these DOJ antitrust enforcement actions increase the quantity of output and simultaneously decrease the price of output. Our results show that government antitrust enforcement leads to persistently higher levels of economic activity in targeted industries.

Keywords: antitrust enforcement; economic activity; employment; business formation (search for similar items in EconPapers)
JEL-codes: E24 J21 K21 L40 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2023-10-02
New Economics Papers: this item is included in nep-com, nep-law and nep-reg
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Antitrust Enforcement Increases Economic Activity (2024)
Working Paper: Antitrust Enforcement Increases Economic Activity (2023)
Working Paper: Antitrust Enforcement Increases Economic Activity (2023)
Working Paper: Antitrust Enforcement Increases Economic Activity (2023)
Working Paper: Antitrust enforcement increases economic activity (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:1488

DOI: 10.2139/ssrn.4539741

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