Competition Law as Market Discipline

19 Pages Posted: 15 Aug 2002

See all articles by Hiau Looi Kee

Hiau Looi Kee

World Bank - Development Research Group (DECRG)

Bernard Hoekman

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS); Centre for Economic Policy Research (CEPR); Economic Research Forum (ERF)

Date Written: July 2002

Abstract

Since the early 1990s, numerous countries have adopted or strengthened competition legislation. In this paper we investigate the impact of competition law on markups of industries over time across a large number of countries. We find measures of external and internal competition (imports and the number of firms domestic firms) to be major sources of market discipline, whereas the direct effect of competition law is insignificant. However, competition laws do have a marginal effect, enhancing domestic competition when imports are small relative to domestic production. In addition, the effect of competition law is significantly stronger for large countries.

Keywords: Competition law, import penetration, industry markup, country size.

JEL Classification: F12, F13, L11, L40

Suggested Citation

Kee, Hiau Looi and Hoekman, Bernard, Competition Law as Market Discipline (July 2002). Available at SSRN: https://ssrn.com/abstract=320282 or http://dx.doi.org/10.2139/ssrn.320282

Hiau Looi Kee (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

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202-473-4155 (Phone)
202-522-1159 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/hkee

Bernard Hoekman

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

via Boccaccio 121
Florence, Florence 50133
Italy

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Economic Research Forum (ERF) ( email )

21 Al-Sad Al-Aaly St.
(P.O. Box: 12311)
Dokki, Cairo
Egypt

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