Do We Need Competition Policy in an Integrated World Economy?

Abstract

The recent emergence worldwide of pro-market regimes and the subsequent adoption of competition policies and enforcement agencies by nations worldwide have renewed interest in the harmonization of competition policy between the world's various antitrust agencies. Proposals by noted scholars and practitioners argue that since increased levels of international trade increase the likelihood of anticompetitive behavior, traditional approaches to antitrust are incapable of supporting an open and free international trading system. Accordingly, a supranational antitrust enforcement agency may be able to deter cartelization more effectively than individual agencies. A second related rationale offered in support of harmonization initiatives is that the often anticompetitive effects of the distinct and disparate national industrial policy objectives can only be restrained by standardization of international competition practices. In this paper, we closely examine the arguments offered in support of harmonization of competition policy and find them unpersuasive. First, numerous empirical studies suggest that trade and the concurrent expansion of geographic markets do not augment the possibility of anticompetitive practices but rather reduce them. Second, it is questionable that the efficiencies associated with the internationalization of antitrust enforcement are significant.

JEL Classification: N76