Trade Openness and Antitrust Law

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Openness to international trade and adoption of antitrust laws can both curb anticompetitive behavior. But scholars have long debated the relationship between the two. Some argue that greater openness to trade makes antitrust laws unnecessary, while others contend that antitrust laws are still needed to realize the benefits of trade liberalization. Limitations of data have made this debate largely theoretical to date. We study the relationship between trade and antitrust regimes empirically using new data on antitrust laws and enforcement activities. We find that openness to trade and stringency of antitrust laws are positively correlated from 1950 to 2010 overall, but the positive correlation disappears in the early 1990s as a large number of countries adopt antitrust laws. However, we find a positive correlation between openness to trade and resources and activities for antitrust enforcement for both early and late adopters of antitrust regimes during this period.

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