Collaborative Research: The Law and Politics of Antitrust in Open Economies

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Antitrust law prohibits cartels and other anti-competitive practices in order to safeguard consumer interests and promote market efficiency and innovation. Legal doctrines, theoretical models, and empirical analyses of antitrust traditionally assume "closed" economies, where the boundaries of the market and the nation state coincide. Yet today, foreign firms often compete in U.S. markets, and exports are increasingly important for U.S. firms. This project offers a new understanding of antitrust in open economies and gathers extensive new data on antitrust laws and enforcement to allow systematic analyses of the relationship between trade and antitrust.Two decades ago, less than forty countries had antitrust laws. Today, more than one hundred thirty countries do. Strikingly, this rapid proliferation of antitrust laws has coincided with substantial liberalization of international trade, even though trade openness has conventionally been thought to reduce the need for antitrust by increasing market competition. This raises the concern whether governments are enacting and enforcing antitrust laws with a protectionist bias against foreign producers. Alternatively, trade openness may require more vigorous enforcement and lead to increased international enforcement cooperation, because open trade creates greater opportunities and incentives for international antitrust violations. This project examines the trade-antitrust relationship theoretically, as well as empirically by collecting new data on antitrust laws and enforcement (at the industry level over several decades in the United States and in the aggregate for numerous other countries). It thus provides a stronger theoretical and empirical foundation for the important policy debate over an international antitrust regime. More broadly, it will improve our understanding of how law mediates the relationship between politics and economics, elucidate the effects of delegating authority to expert bodies in a crucial issue area, and advance our understanding of the political and policy consequences of economic globalization.