How EU Markets Became More Competitive than Us Markets: A Study of Institutional Drift

90 Pages Posted: 13 Jun 2018 Last revised: 22 Jun 2018

See all articles by German Gutierrez Gallardo

German Gutierrez Gallardo

New York University (NYU) - Leonard N. Stern School of Business, Students

Thomas Philippon

New York University (NYU) - Department of Finance; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2018

Abstract

Many European markets today appear more competitive than their American counterparts. We document this surprising reversal of history and propose an explanation. Our model of political support predicts that a supranational regulator enforces free markets beyond the preferences of any individual country. We find that European institutions are indeed more independent and enforce competition more strongly than any individual country ever did. Countries with ex-ante weaker institutions benefit more from the delegation of competition policy to the EU level. Our model also explains why political and lobbying expenditures have increased more in America than in Europe.

Suggested Citation

Gutierrez Gallardo, German and Philippon, Thomas, How EU Markets Became More Competitive than Us Markets: A Study of Institutional Drift (June 2018). NBER Working Paper No. w24700. Available at SSRN: https://ssrn.com/abstract=3194929

German Gutierrez Gallardo (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business, Students ( email )

NY
United States

Thomas Philippon

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
79
Abstract Views
894
rank
329,004
PlumX Metrics