Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 2005:6: When do Countries Introduce Competition Policy?

Rikard Forslid (), Jonas Häckner () and Astri Muren ()
Additional contact information
Rikard Forslid: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden
Jonas Häckner: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden
Astri Muren: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden

Abstract: This paper first presents stylised evidence showing how the date of the introduction of competition policy is correlated with country size. Smaller countries tend to adopt competition policy later. We thereafter present a simple theoretical model with countries of different size and firms competing à la Cournot. The predictions of the model are consistent with the empirical regularity presented. An implication of our model is that globalisation may give very different incentives regarding competition policy for small and large developing countries.

Keywords: Competition policy; anti-trust; trade costs

JEL-codes: F12; F15; F21; R12

21 pages, June 1, 2005

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