Imports, entry and competition law as market disciplines
Imports, entry and competition law as market disciplines
KeeH. L., Hoekman B. European Economic Review, May 2007, Vol. 51 No. 4, Start page: 831, No. of pages: 28
Purpose – To compare the effectiveness of competition law across countries. Design/methodology/approach – Defines competition law in terms of horizontal and vertical agreements between firms and abuse of market power,developing a Cournot competition model where the price margin is negatively correlated with the number of domestic firms in the industry and import share. Proxies the price margin by a semi-translog markup function in a production function. Regresses data for 42 countries, covering 28 industries, from 1981 to 1998. Findings – Finds that competition law has ambiguous direct effects on industry markup. Shows that industries with more domestic firms and more import competition have lower markups, while competition law does increase the number of firms in the long run (and therefore has an indirect effect) in concentrated industries. Research limitations/implications – Calls for research into how competition laws affect entry to an industry in the long term. Originality/value – Reveals that there is a link between competition and margins, but does not show how competition law affects this.ISSN:0014-2921Reference: 36AR159DOI: 10.1016/j.euroecorev.2006.06.006
Keywords: Competition, International trade, Law, Oligopolies, Pricing
