Working Paper: NBER ID: w12902
Authors: Dennis W. Carlton; Randal C. Picker
Abstract: Since the passage of the Interstate Commerce Act (1897) and the Sherman Act (1890), regulation and antitrust have operated as competing mechanisms to control competition. Regulation produced cross-subsidies and favors to special interests, but specified prices and rules of mandatory dealing. Antitrust promoted competition without favoring special interests, but couldn't formulate rules for particular industries. The deregulation movement reflected the relative competencies of antitrust and regulation. Antitrust and regulation can also be viewed as complements in which regulation and antitrust assign control of competition to courts and regulatory agencies based on their relative strengths. Antitrust also can act as a constraint on what regulators can do. This paper uses the game-theoretic framework of political bargaining and the historical record of antitrust and regulation to establish and illustrate these points.
Keywords: Antitrust; Regulation; Competition Policy
JEL Codes: K21; K23; L4; L43; L44; L5; L51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Antitrust (K21) | Regulation (L51) |
| Regulation (L51) | Cross-subsidies (H23) |
| Regulation (L51) | Favoritism (J15) |
| Antitrust (K21) | Competition (L13) |
| Regulation (L51) | Inefficiencies (D61) |
| Sherman Act (K21) | Competitive Pricing (L11) |
| Sherman Act (K21) | Influence of Special Interests (D72) |
| Antitrust (K21) | Regulatory Actions (G18) |