Signaling through Public Antitrust Enforcement: A Generalization

This note shows that the argument of Šaljanin(2017) [Šaljanin, 2017. “Signaling through public antitrust enforcement―, Economics Letters 169, 4 - 6] that public antitrust enforcement complements private investment is robust to allowing public investment in anti-trust enforcement to be productive. However, unlike as in the case of unproductive public investment, over investment in public antitrust enforcement does not necessarily signal that the government is pro-competition: in pooling equilibria either only the anti-competition government or both types of government over invests, whereas in the separating equilibrium only the pro-competition government over invests.