The Profitability of Price Fixing: Have Stronger Antitrust Sanctions Deterred?
16 Pages Posted: 30 Jul 2008
Date Written: April 8, 2005
Abstract
In this study we investigate whether changes in antitrust penalties issued by the Department of Justice have led to improved effectiveness of antitrust actions with respect to price-fixing over 1981-2001. We use effectiveness of antitrust enforcement documented by Bosch and Eckard (1991) and Thompson and Kaserman (2001) for 1962-80 as a basis for comparison. Results indicate that the changes in antitrust law do improve effectiveness as measured by changes in market valuations of offenders, but the durability of deterrent effect and the rate of recidivism are left unaffected, suggesting that Sherman Act Section 1 enforcement has little lasting effect.
Keywords: Antitrust, recidivism, price fixing, stock market
Suggested Citation: Suggested Citation