The Political Economy of Antitrust

Motivated by recent events and experiences in antitrust enforcement and policy in the United States and the European Union, and new insights and findings from academic research, this book presents a collection of theoretical, empirical and public policy-oriented articles representing recent research on the political-economy of antitrust. Political-economy is defined broadly to include the demand-side drivers of antitrust activity such as market failures and interest-groups, along with supply-side drivers including ideology and partisan politics as well as the importance of informational limitations in antitrust enforcement and the institutional structure of the antitrust agencies. Examining issues related to the political-economy of antitrust is important as antitrust policy and enforcement provide a key mechanism for preserving the competitiveness of markets, with implications for innovation, efficiency, growth and welfare. This book brings together contributions by leading academic researchers in the areas of political-economy, cartels, merger and non-merger enforcement, as well as economists working with antitrust authorities in the U.S. and E.U., to make a timely contribution for researchers and practitioners. The chapters in this volume cover the full range of topics: enforcement of cartels; merger control; monopolization and abuse of dominance; and systemic issues in antitrust enforcement and policy. Since the last few years have seen significant changes in both the U.S. and E.U. in the attitudes towards cartels, the book places emphasis on antitrust enforcement of cartels, including topics such as the corporate leniency programs that have recently been introduced in the U.S. and E.U., optimal deterrence mechanisms against cartels and detection of cartels. While the individual chapters of the book make independent contributions and may be read separately, the book brings together articles from various sub-areas to present a more encompassing picture. The first chapter provides an overview of some of the trends and recent research in antitrust enforcement and policy and highlights the contributions made by the chapters in this volume.

Dr. Ghosal received his Ph.D. in Economics from the University of Florida (USA). Before joining the faculty at Georgia Institute of Technology in 2001, he was an Economist at the Antitrust Division (U.S. Department of Justice) where he worked on issues related to mergers, horizontal and vertical market power, tying agreements, joint ventures, price-fixing and cross-subsidization. Some of the industries he was involved in investigating included electricity, natural gas, coal, information technology, database management systems, radio broadcasting, oilfield drilling services and postal markets. While at the Antitrust Division, the investigative procedures and competition advocacy issues lead him to interact with other governmental agencies such as the U.S. Federal Energy Regulatory Commission, the U.S. Department of Energy and the U.S. Department of State. His current areas of research include: political economy of antitrust enforcement; development of price and structural screens for detecting cartels; antitrust evaluation of mergers in electric generation and information technology markets; innovation strategy and competition in the automobile industry; effectiveness of U.S. and European healthcare systems; competition assessments of economic regulations; impact of uncertainty and sunk costs on industry dynamics; and efficiency, innovation and M&As in the pulp and paper industry. He has published in several peer reviewed journals including the Journal of Industrial Economics, International Journal of Industrial Organization, World Competition Law and Economics Review, Journal of Competition Law and Economics, Review of Industrial Organization, Review of Economics and Statistics, Economic Inquiry, Economic Issues, Economics Letters and Journal of Money, Credit and Banking. In addition he has a book chapter Economics, Politics and Merger Control published in Recent Advances in Antitrust Enforcement (MIT Press). Dr. Ghosal is a Research Fellow at CESifo (Munich) and ENCORE (Amsterdam), a Research Professor at the Department of Innovation, Manufacturing and Service, Deutsches Institut fur Wirtschaftsforschung (DIW, Berlin) and a Research Affiliate in the Alfred P. Sloan Foundation, Industry Studies Program. He is a member of the Editorial Board of The Review of Industrial Organization. He has taught a graduate summer school course on Competition Law Enforcement at the University of Amsterdam, and presented lectures on Regulation of Mergers and Detection of Cartels: What we can learn from the Experiences of the United States and Europe to government officials and other audiences in Lima (Peru). He has been a consultant for various organizations including the Center for Paper Business and Industry Studies (A Sloan Foundation Research Center) and the Organization for Economic Cooperation and Development (Paris). Johan Stennek is an associate professor in economics, working at the Research Institute of Industrial Economics in Stockholm, Sweden. His fields of research are industrial economics, competition policy and regulatory issues, currently focusing on (i) mergers & acquisitions, (ii) markets with few sellers and few buyers (bilateral oligopoly), and (iii) electronic communications. Professor Stennek is active as an economic expert in competition and regulation cases for major Swedish and European corporations, as well as the European Commission and the Swedish Government. He is affiliated to the CEPR and the Swedish Competition Authoritys Council for Competition Research.