Why (no) global competition policy is a tough choice
نویسندگان
چکیده
This paper analyzes the global aspects of competition policy. The effects of a merger in the global marketplace will generally be asymmetric, and consequently lead to a bias in domestic merger decisions. In order to compare different policy regimes, we ascribe general objective functions to the respective authorities and employ a stochastic notion of mergers. We show that under the territoriality principle, the resulting global policy is too lax, whereas when domestic agencies assume extra-territorial powers the resulting policy is inefficiently strict. A global authority would achieve the first best outcome. The gains, however, would be distributed unevenly, which may explain the difficulty of instituting such an authority. © 2005 Board of Trustees of the University of Illinois. All rights reserved. JEL classification: F23; L4
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