Deterrence effects of korean antitrust enforcement on producer prices and profit margins

feinberg, robert m. ; park, minsoo;

Antitrust enforcement is well established in Korea, yet there has been little study
of its effectiveness. John Connor, however, noted that �the Korean [Fair Trade
Commission] has the best record of anti-cartel enforcement in Asia.�1 In this
article, we examine several datasets to investigate whether antitrust enforcement
in Korea, especially anti-cartel activity, has had a price-limiting impact over the
past couple of decades. We compare the behavior of firms and industries that
have been subject to antitrust investigation to those that have not. We examine
the response of the firms and industries under antitrust investigation following
the cases. The results presented here are consistent across two very different data
sets of indicators for the Korean economy. The results suggest that long-term deterrence is unlikely to be observed from antitrust investigations, although the
impact on short-term price and profit margin may be expected. However, the
stronger effects observed suggest that firms in Korea have begun to pay more attention to the actions of the Korean Fair Trade Commission (KFTC) over the
past decade since the more rigorous enforcement of antitrust