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ABSTRACT
A growing body of literature evaluates the impact of antitrust laws on economic growth. Most of these empirical studies identify a positive impact; however, the existing literature only studies the effect of the existence of antitrust laws, but not their enforcement. To fill this gap in the literature, this Article uses private antitrust case filing numbers to examine the growth effect. Employing U.S. data and, after addressing endogeneity, using a two-stage least squares (2SLS) regression analysis, I identify a negative and robust association between private enforcement and output on a national level in the short run over the period from 1954 to 2019. However, I do not find a robust association between the two in the long run. In view of the results, I hypothesize a mechanism of an adverse effect of private antitrust enforcement on output in the short run.
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I. INTRODUCTION: MECHANISM OF POSITIVE IMPACT
A.ANTITRUST AND LONG-RUN ECONOMIC GROWTH
Governments around the globe are increasingly interested in assessing the impact of their competition policies and the effectiveness of their antitrust authorities.1 Measuring the effects of competition law and its enforcement benefits societies in at least three ways. First, evaluations allow legislators and the public to hold antitrust authorities accountable for their work.2 Second, such measurement can help antitrust authorities identify and learn from poor enforcement decisions, hence improving their enforcement quality.3 Third, evaluation studies facilitate the overall design of competition regimes.4 In light of these advantages, from time to time, governments require their antitrust authorities to show evidence on the links between competition, competition policy, and various macroeconomic outcomes.5 Economic growth is one of the macro-outcomes governments are concerned about.6
in the long run, competition policies affect economic growth by altering total factor productivity (hereinafter productivity). in 1956, Robert Solow, an economist who later received the Nobel prize, introduced a long-run growth model.7 The Solow model suggests that a rise in productivity drives the economy to grow.8 Productivity growth drives economic growth and reflects a more efficient use of production inputs, such as labor and capital.9 In the field of antitrust, the currently prevailing view is that competition enhances productivity, which in turn promotes economic growth.10 Theoretically, stronger competition leads to higher productivity through three...