The Political Economy of International Antitrust Harmonization

John O. McGinnis

Northwestern University - School of Law

June 2003

Northwestern Law & Econ Research Paper No. 03-08; Northwestern Public Law Research Paper No. 03-09

This essay argues against substantive international antitrust harmonization, by which I mean a single international regime binding on all nation states in at least some areas of antitrust. While multiple domestic antitrust regimes impose some costs, substantive harmonization likely imposes more substantial costs. An international lawmaking regime creates high agency costs because it is less subject to democratic control. It also imposes costs by discouraging beneficial change, as the regime once in place will be difficult to transform. Its long-run costs are particularly problematic in a world that is not static. As information costs, transportation costs, and trade restrictions decline, it may well be that the appropriate scope of the optimal antitrust regime will narrow as market processes become better correctives to market imperfections than government intervention. The lock-in costs of an international regime thus are particularly high in a world in which the pace of change is ever faster.

In contrast, the essay suggests that an antidiscrimination regime for competition law located within the World Trade Organization may be appropriate. The WTO has an interest in precluding nations from discriminating in antitrust rules that affect market access in order to prevent the substitution of nontariff barriers for tariff barriers. An antidiscrimination regime has advantages over substantive harmonization, because formulating and applying antidiscrimination rules have fewer agency costs than formulating and applying substantive rules. Moreover, the antidiscrimination model permits continued innovation and change in substantive rules, thus facilitating continued debate about the optimal content of regulation. Finally, this more modest and practical objective - the elimination of foreign bias - would make an international competition agenda more amenable to being adopted in its most practical forum - the WTO.

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Date posted: June 19, 2003  

Suggested Citation

McGinnis, John O., The Political Economy of International Antitrust Harmonization (June 2003). Northwestern Law & Econ Research Paper No. 03-08; Northwestern Public Law Research Paper No. 03-09. Available at SSRN: http://ssrn.com/abstract=417420

Contact Information

John McGinnis (Contact Author)
Northwestern University - School of Law ( email )
375 E. Chicago Ave
Unit 1505
Chicago, IL 60611
United States
312-503-3235 (Phone)
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