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The Political Economy of Antitrust

Antitrust in Open Economies

Book Chapter
Reference
Francois, Joseph and Henrik Horn (2007). “Antitrust in Open Economies”. In Vivek Ghosal and Johan Stennek (Eds.), The Political Economy of Antitrust (463–483). Amsterdam: Elsevier. doi.org/10.1016/S0573-8555(06)82018-3

Authors
Joseph Francois, Henrik Horn

Editors
Vivek Ghosal, Johan Stennek

We examine antitrust rules in a two county general equilibrium trade model, contrasting national and multilateral (cooperative) determination of competition policy, exploring the properties of the policy equilibrium. It is not imperfect competition, but variation in competitive stance between sectors that matters for trading partners. Beggar-thy-neighbor competition policies relate to countries' comparative advantages, and hurt the factor intensively used, or specific to, the imperfectly competitive sector. They also create a competitive advantage for export firms. FDI can be pro-competitive in this context, reducing the scope for beggar-thy-neighbor policies and reducing the gains from a multilateral competition agreement.

Henrik Horn

+46 (0)8 665 45 40
henrik.horn@ifn.se