Imports, Entry and Competition Law as Market Disciplines

Hoekman, Bernard; Kee, Hiau Looi

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Imports, Entry and Competition Law as Market Disciplines

32 Pages Posted: 3 Apr 2003

See all articles by Bernard Hoekman

Bernard Hoekman

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

Hiau Looi Kee

World Bank - Development Research Group (DECRG)

There are 2 versions of this paper

Date Written: February 2003

Abstract

Since the early 1990s, numerous countries have adopted or strengthened competition legislation. In this Paper we investigate the impact of competition law on industry markups over time and across a large number of countries. We find both domestic and foreign competition to be major sources of market discipline in concentrated markets, but that the direct effect of competition law is insignificant. Once allowance is made for the endogeneity of both domestic competition (number of firms) and the adoption of a competition law, however, we find that competition laws have an indirect effect on equilibrium markups by promoting a larger number of domestic firms.

Keywords: Competition law, import penetration, domestic entry, industry markup

JEL Classification: F12, F13, L11

Suggested Citation: Suggested Citation

Hoekman, Bernard and Kee, Hiau Looi, Imports, Entry and Competition Law as Market Disciplines (February 2003). Available at SSRN: https://ssrn.com/abstract=392682