DP5162 When do Countries Introduce Competition Policy?

Author(s): Rikard Forslid, Jonas Häckner, Astri Muren
Publication Date: August 2005
Keyword(s): anti-trust, competition policy, trade costs
JEL(s): F12, F15, F21, R12
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=5162

This paper first presents stylized evidence showing how the date of the introduction of competition policy is correlated with country size. Smaller countries tend to adopt competition policy later. We thereafter present a simple theoretical model with countries of different size and firms competing à la Cournot. The predictions of the model are consistent with the empirical regularity presented. An implication of our model is that globalization may give very different incentives regarding competition policy for small and large developing countries.