Working Paper: CEPR ID: DP5162
Authors: Rikard Forslid; Jonas Hckner; Astri Muren
Abstract: 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.
Keywords: Antitrust; Competition Policy; Trade Costs
JEL Codes: F12; F15; F21; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Country size (larger) (R12) | earlier introduction of competition policy (L49) |
| High trade costs (F12) | greater incentive for larger countries to adopt competition policy (L49) |
| Decreased trade costs (F19) | increased incentive for smaller countries to adopt competition policy (L49) |