Political Characteristics and Competition Law Enactment: A Cross-Country Empirical Analysis

Abstract

Existing empirical research on the factors that motivate the enactment of competition laws has largely focused on economic determinants and not on political ones. This paper fills that gap by incorporating a few key political variables into the analysis of the enactment of competition laws across the world. Specifically, the paper focuses on three political variables that, for the most part, capture the political characteristics relevant to the enactment of competition laws: the nature of the political system, the rule of law, and the political ideology of the ruling government. The empirical analysis focuses on 183 countries during the period 1990-2008. The results from panel data regressions indicate that the enactment of competition laws is more likely if the political system is more democratic and left-leaning. Surprisingly, countries with weak systems of rule of law are more likely to enact competition laws, leading to questions of application and enforcement.

Keywords: Antitrust, Competition Law, Competition Policy

JEL Classification: K21, L40, P16