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Industrial Concentration under the Rule of Reason

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Robert Bork thought that antitrust restrictions on horizontal mergers should be confined to already highly concentrated markets. Actual policy, which had been much more restrictive, adopted Bork’s recommendation in the early 1980s. This paper examines the connection between this policy shift and concentration in the manufacturing sector. I find that concentration, which had been unchanged on average for all of the 20th century, began rising at the same time that merger policy changed. Concentration has increased steadily over the entire post-Bork period. The increase has been especially pronounced in consumer goods industries, which were already becoming more concentrated in the pre-Bork era. I find little difference in the underlying trends between already highly concentrated industries and the rest of manufacturing. Neither slowing growth in domestic manufacturing nor growing imports seem sufficient to explain the increased concentration.

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