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The Impact of the National Industrial Recovery Act on Cartel Formation and Maintenance Costs

Barbara Alexander
The Review of Economics and Statistics
Vol. 76, No. 2 (May, 1994), pp. 245-254
Published by: The MIT Press
DOI: 10.2307/2109879
Stable URL: http://www.jstor.org/stable/2109879
Page Count: 10
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
The Impact of the National Industrial Recovery Act on Cartel Formation and Maintenance Costs
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Abstract

Antitrust regime shifts represented by the 1933 adoption and 1935 annulment of the National Industrial Recovery Act are postulated to have effects analogous to temporary achievement of Bradburd and Over's "integrative concentration level (Bradburd and Over, 1982); a level at which cartel formation and maintenance costs are outweighed by collusive spoils. "Regime switching" analysis of Census of Manufactures data reveals a "critical concentration level" of 60% in 1933, which disappears in 1935, and re-emerges at 38% in 1937. The empirical results support the Bradburd and Over framework and suggest that temporary shifts in antitrust regimes may have lasting impacts on the ability of an industry to exercise market power.

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