The International Diffusion of Competition Laws

Abstract

Competition laws aim to prevent firms' anticompetitive behavior - such as forming cartels to fix prices or to share markets - in the marketplace. From the enactment of the Sherman Act (1890) in the United States until the 1970s, competition laws existed only in a handful of industrialized countries. In the last few decades, however, many countries around the world with varying degrees of economic development have adopted competition policies and established independent competition authorities. The number of countries with competition laws has grown from around twenty in 1980 to over a hundred in 2006. What explains this rapid international spread of competition laws? In this paper, I explore the mechanisms through which competition laws spread to countries around the world within a relatively circumscribed time period. Recent scholarship on international diffusion of liberal policies and politics suggests four mechanisms through which diffusion occurs: coercion, competition, learning, and emulation. This paper lays out the different theoretical arguments accounting for the international diffusion of policies, and tests these arguments empirically with newly-collected data on competition law adoption among countries in the international system in the period 1955-2009.