Democracy, Inequality, and Antitrust

Abstract

This paper investigates the relationship between democracy and antitrust policy. Strong antitrust policies advance the economic and political interests of most citizens, making their adoption more likely in institutional settings that weigh the interests of consumers. We examine the empirical relationship between democracy, inequality, and antitrust policies in a broad panel of countries from 1951 to 2010. Using a variety of empirical strategies, we find that democracy is predictive of stricter antitrust policies in countries with low but not high levels of inequality. This result accords with the idea that economic inequality can undermine the political forces that tend toward stronger antitrust policy in democracies. We then investigate a supposed exception to this pattern: the United States in the late 19th century. Through a mixed-methods analysis, we present evidence that democracy and inequality shaped the politics of antitrust in this era in a way that resonates with our cross-country analysis.

Keywords: antitrust, monopoly, democracy, inequality

JEL Classification: L4, K00, K21, N21, N00, N4, P48, P16