Antitrust at the State Level: Incentives of Attorneys General and Determinants of Multi-Enforcer ...

141 Pages·2015·4.72 MB·English

by  Matthew Cutillo

Florida State University Libraries
Electronic Theses, Treatises and Dissertations The Graduate School
2013
Antitrust at the State Level: Incentives of
Attorneys General and Determinants of
Multi-Enforcer Case Durations
Matthew C. Cutillo
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FLORIDA STATE UNIVERSITY
COLLEGE OF SOCIAL SCIENCES AND PUBLIC POLICY

ANTITRUST AT THE STATE LEVEL: INCENTIVES OF
ATTORNEYS GENERAL AND DETERMINANTS
OF MULTI-ENFORCER CASE DURATIONS

By
MATTHEW C. CUTILLO

A Dissertation submitted to the
Department of Economics
in partial fulfillment of the
requirements for the degree of
Doctor of Philosophy

Degree Awarded:
Fall Semester, 2013
Matthew C. Cutillo defended this dissertation on November 15, 2013.
The members of the supervisory committee were:

Gary M. Fournier
Professor Directing Dissertation

Charles Barrilleaux
University Representative

R. Mark Isaac
Committee Member

Thomas Zuehlke
Committee Member

The Graduate School has verified and approved the above-named committee members, and
certifies that the dissertation has been approved in accordance with university requirements.
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This dissertation is dedicated to my wife, Christian, for her unending love and support,
and to my uncle, Dennis, for showing a young man that intelligence is excellence. Many thanks
and much love is given to my parents for always believing in me.

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ACKNOWLEDGEMENTS

I am forever indebted to Florida State University for the outstanding faculty and environment
which have forged the man I am. Particular thanks are in order to my advisor, Gary Fournier,
who has dedicated tremendous time and effort on my behalf. I also thank Mark Isaac, Thomas
Zuehlke and Charles Barrilleaux for their guidance and efforts on my committee. They are all a
tremendous benefit to the university.
I also thank Emily Meyers, antitrust counsel to the National Association of Attorneys
General, and Eli Friedman, of the Florida Office of the Attorney General, for their guidance.
Without their feedback on technical questions, this dissertation would be a shell of what it has
become.
I thank Tim Salmon for all of his guidance and teachings throughout my undergraduate
and graduate experience. While it is sad for the university to have such a brilliant mind break
away, his lasting influence is still felt throughout the economics department.
Throughout my experience at Florida State I have befriended many strange and
wonderful classmates. I am thankful for their friendship. I particularly thank Mark Partridge for
his encouraging attitude and relentless spirit.
Special thanks are in order to Juan, Christin and Sophia Gonzalez for so willingly
boarding this intrastate traveler on what has often been extremely short notice. These are the type
of people that make Tallahassee a special and amazing place to live.
The Co-cathedral of Saint Thomas More has become to me a wonderful sanctuary of faith
and worship in Tallahassee. The lessons I have learned in those walls have guided me every day
of my life and I thank God for all of His blessings.
Finally, I would like to thank my loving family. Thank you to Christian, Mom, Dad,
Joann, Geoff, Michelle, Dennis, Jamee, Michael, Sonya, Treela, Dan, Paul and Alea for their
guidance, love and support, without which none of this would have been possible.

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TABLE OF CONTENTS

List of Tables ................................................................................................................................ vii
List of Figures ................................................................................................................................ ix
ABSTRACT .................................................................................................................................... x
1. INTRODUCTION .............................................................................................................. 1
2. AN ASSESSMENT OF THE RELEVANT STATE-LEVEL ANTITRUST
LITERATURE AND DATABASE .................................................................................... 6
2.1 Literature Review.................................................................................................... 7
2.1.1 Empirical Studies ...................................................................................... 7
2.1.2 Reform Proposals .................................................................................... 16
2.2 The National Association of Attorneys General State Antitrust Litigation
Database ................................................................................................................ 21
2.3 Conclusion ............................................................................................................ 33
3. DEVELOPING AND APPLYING A MODEL OF THE ANITRUST DECISIONS OF
STATE ATTORNEYS GENERAL .................................................................................. 35
3.1 Developing a Model of State-Level Antitrust Behavior ....................................... 36
3.1.1 A Basic Model of State Antitrust Participation ....................................... 36
3.1.2 State Antitrust Participation with Political Incentives and Free-riders .... 42
3.1.3 Hypotheses ............................................................................................... 44
3.2 Applying a Model of State-Level Antitrust Behavior ........................................... 46
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3.2.1 Data Sources and Joining State Estimation ............................................ 48
3.2.2 First Stage Estimation of the Number of Joining States ......................... 50
3.2.3 First Stage Results................................................................................... 55
3.2.4 Level of Involvement Analysis ............................................................... 58
3.3 Conclusion ............................................................................................................ 70
4. DOES JOINT STATE AND FEDERAL INVOLVEMENT PROVOKE DELAYS IN
ANTITRUST CASES? ..................................................................................................... 72
4.1 Perceived Inefficiencies among Multiple Antitrust Enforcers .............................. 75
4.1.1 The Microsoft Lawsuit ............................................................................ 76
4.1.2 Determinants of State Antitrust Case Delays.......................................... 84
4.2 Analyzing Antitrust Case Durations in a Multi-Enforcer System ........................ 90
4.2.1 Data Sources and Methodology .............................................................. 91
4.2.2 Analysis and Results ............................................................................... 95
4.3 Conclusion .......................................................................................................... 109
5. CONCLUSION ............................................................................................................... 111
APPENDIX A ............................................................................................................................ 116
BIBLIOGRAPHY ...................................................................................................................... 124
BIOGRAPHICAL SKETCH ..................................................................................................... 129

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LIST OF TABLES
Table 2.1 Summary of Results Related to State Antitrust (Select Variables) .............................. 13
Table 2.2 Average State Involvement by Case Type in Multistate Cases 1990-2010 .................. 25
Table 2.3 Top 5 Industries by State Participation 1990-2010 ...................................................... 26
Table 2.4 Case Length by State Participation 1990-2010 ............................................................. 30
Table 2.5 Summary Statistics of Database Variables by Case 1990-2010 ................................... 32
Table 3.1 Summary Statistics for Estimation of Joining States .................................................... 53
Table 3.2 Estimating Joining States via Probit ............................................................................. 54
Table 3.3 Summary Statistics for State Antitrust Involvement Estimation .................................. 62
Table 3.4 Ordered Probit Estimation of State Antitrust Involvement .......................................... 65
Table 4.1 Summary Statistics for Case Duration Analysis ........................................................... 96
Table 4.2 Non-Proportional Weibull Model of State Antitrust Case Durations ........................... 99
Table 4.3 Summary Statistics for Duration Analysis with Combined Cases ............................. 107
Table 4.4 Non-Proportional Weibull Model of Combined State Antitrust Case Durations ....... 108
Table A.1 Summary of State Participation Behavior 1990-2010 ............................................... 116
Table A.2 Estimating Joining States via Probit (Marginal Effects)............................................ 118
Table A.3 Ordered Probit Estimation of State Antitrust Involvement (Marginal Effects) ......... 119
Table A.4 Ordered Probit Comparison with and without Political Incentives ........................... 120
Table A.5 Proportional and Non-Proportional Weibull of Case Duration ................................. 121
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Table A.6 Cox Proportional Hazard of Case Duration ............................................................... 122
Table A.7 Breakdown of Antitrust Violations for Case Duration Analysis ............................... 123

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LIST OF FIGURES
Figure 1.1 Total Antitrust Suits Filed by State Attorneys General 1990-2010 .............................. 3
Figure 1.2 Plot of Case Length and State Involvement by Federal Participation ........................... 4
Figure 2.1 Single and Multi State Cases Filed Per Year 1990-2010 ............................................ 22
Figure 2.2 Adjusted Average Damages Per Year In Multistate Suits 1990-2009 ........................ 28
Figure 3.1 Graphical Representation of the Planner’s Lead State Decision ................................. 39
Figure 3.2 Attorney General Decision Tree .................................................................................. 47
Figure 3.3 Graphical Representation of the Ordered Probit on Φ(ui)........................................... 60
Figure 4.1 U.S. Map by Microsoft Antitrust Involvement ........................................................... 81
Figure 4.2 Timeline of Microsoft Cases ..................................................................................... 105

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