A formal model is presented to describe the technology through which an initial Department of Justice indictment can reveal evidence of additional infractions in the same industry. The model then is applied to a study of the highway construction industry. It is shown that the model is able to explain the relative responsiveness of highway construction cartels in various States to recent changes in the severity of antitrust sanctions. The model is organized around the belief that the flow of information on antitrust violations is closely linked to commodity flows. In particular, the likelihood of an indictment in one submarket revealing evidence of violations in another submarket is hypothesized to depend on the number of intermarket firms (i.e., those operating in both submarkets). 9 references. (Author abstract modified)
Spillover Effect of Antitrust Enforcement
NCJ Number
106569
Journal
Review of Economics and Statistics Volume: 68 Issue: 1 Dated: (February 1986) Pages: 122-131
Date Published
1986
Length
20 pages
Annotation
This paper addresses the issue of how the threat of antitrust enforcement spills over from one industrial submarket to another.
Abstract