Trade and Antitrust: Supporting or Undermining Int'l Cooperation?

• In Event: Firms and the Political Economy of Regulation

Abstract

TRADE AND ANTITRUST: REGULATORY PROTECTIONISM OR A WAY TO ADDRESS THE PATHOLOGIES OF ECONOMIC INTEGRATION IDENTIFIED BY NEW NEW TRADE THEORY? Antitrust law and related public policies provide governments with a set of powerful tools to shape and reshape the structure of markets and the distribution of the benefits between economic actors. Previous research has shown that many trade agreements contain antitrust chapters or provisions, that trade agreements can be an important conduit for the adoption of antitrust laws, and that increased trade flows lead to increased antitrust enforcement. A number of scholars and practitioners have raised the concern that this is indicative of antitrust law and its selective enforcement becoming a tool for disguised regulatory protectionism. We offer an alternative view, grounded in the prediction of New New Trade Theory that economic integration increases the size and decreases the number of firms in any given industry, i.e., it results in a move toward oligopolies and facilitates anti-competitive behavior. The adoption and increased enforcement of antitrust laws from this perspective may be viewed as an attempt to remedy key pathologies of economic integration. Empirical analyses at both the macro and the industry level, based in part on an original dataset of a several thousand U.S. antitrust enforcement actions over the course of half a century, support this new perspective grounded in New New Trade Theory.

Author

• Tim Buthe, Technical University of Munich (TUM)