Working Papers

“Procompetitive Effects of State Antitrust Laws: Evidence from the Progressive Era”

Most U.S. states adopted an antitrust statute in the late nineteenth or early twentieth century to regulate anticompetitive conduct and promote competition among firms. I estimate the long-term effects of these laws on manufacturing outcomes using newly digitized state-by-industry data from historical censuses of manufactures. Using difference-in-differences and event study models that account for the staggered nature of treatment timing, I find that these statutes did little to limit the influence of powerful incumbents. The number of manufacturing establishments rose by about 10 percent following adoption, but evidence on ownership structure suggests that this growth was likely driven by the expansion of incumbent firms rather than new entry. I also find that the labor share declined by about 4 percent overall and by about 7 percent in trust-affiliated industries, suggesting that dominant firms held on to their market power despite new legal constraints on anticompetitive conduct. I find no evidence of increased employment or reduced profits, providing further evidence that firms made few meaningful adjustments to pricing or production behavior in response to these laws. These results suggest that antitrust legislation alone is insufficient to disrupt concentrated market power.

“Federal Antitrust Enforcement and Industry Outcomes in the Early Twentieth Century” [with Simcha Barkai and Ezra Karger]

The Sherman Act forms the backbone of federal antitrust policy and has been in place for nearly a century and a half. However, despite its long tradition, the literature on the causal effects of antitrust enforcement remains thin and lacks agreement. To address this gap in the literature, we study federal antitrust enforcement from 1890—the year the Sherman Act was signed into law—through 1951. Using hand-collected data on antitrust cases initiated by the Department of Justice (DOJ), newly digitized state-by-industry tabulations from the census of manufactures that encompass all U.S. manufacturing activity during the study period, and full-count data from decennial population censuses, we examine how DOJ antitrust actions affected workers and firms in targeted industries. We use difference-in-differences and event study models that account for the staggered nature of treatment timing, where treatment is defined based on the state-by-industry cell targeted by a DOJ antitrust action. Preliminary estimates show that employment increased in targeted industries and locations after DOJ initiated an enforcement action. Moreover, enforcement actions taken during the tenure of Thurman Arnold—an Assistant Attorney General for Antitrust who aggressively enforced the nation’s antitrust laws during his time in office from 1938 to 1943—generated larger employment effects than the average antitrust action during the study period. Specifically, enforcement actions taken during Thurman Arnold’s tenure increased employment by about 10 percent in affected markets, while the average enforcement action led to a marginally significant increase in employment of just about 3 percent. These results highlight the importance of enforcement and suggest DOJ antitrust actions made targeted markets more competitive. Ongoing analysis hones in on the manufacturing sector, which was the focus of over half of the antitrust cases that the DOJ initiated during the study period. Outcomes we examine include employment, wages, revenue, and the number of manufacturing establishments.