Examining the recidivism-productivity growth nexus: Evidence from anti-cartel enforcement in the US

Antitrust policy is one of the most challenging issues in modern industrial organisation. Despite numerous studies investigating the relationship between cartel activity and productivity, there has been no systematic examination of the recidivism aspects of firms on productivity growth within an industry. This paper aims to quantify the relationship between cartel recidivism and productivity growth. For this reason, we have used data drawn from US cartel cases over the period 1966-2016 to investigate the interplay between multiple offenders (true recidivists) and productivity growth. The empirical methodology relies on classical econometric techniques (OLS) alongside quantile regression techniques. Our primary finding indicates a negative relationship between recidivism and productivity growth in nearly all empirical specifications. However, in non-colluding markets, the absence of multiple and single offenders is positively linked with productivity growth. Lastly, our findings indicate that higher recidivism rates are associated with patterns consistent with lower observed effectiveness of anti-cartel enforcement. This association suggests a possible link between recidivism, competition policy, and productivity growth.