Cross-Country Effectiveness Gaps in Antitrust Policies: A Quantitative framework

This paper proposes a quantitative, cross-sectional, framework for ex-post evaluation of antitrust policies from an effectiveness and efficacy perspective. The paper looks at antitrust effectiveness and outcome efficacy in the sample countries and reaches some tentative conclusions. Effectiveness is defined as the link from the legal framework and resource use to implementation. Effective implementation is an intermediate policy outcome that is achieved through the use of an enforcement mechanism.

Efficacy is defined as the link from general governance to a “final outcome,” defined as long-term prosperity. Each of these links is assessed through the use of one or more numerical indicator. Preliminary statistical results are consistent with the existence of measurable implementation gaps (1) between the developing and the developed countries, and (2) between the recent European Union members or candidates and the more senior E.U. members, controlling for the size of the agency budget. This gap cannot be bridged merely by increasing the size of the antitrust agencies’ budgets. Reorganizing agencies’ spending priorities as well as developing extra-agency initiatives can be complementary means to bridge these gaps.

The purpose is to measure effectiveness differentials in the implementation of antitrust policies that may exist (1) between the developing and the developed countries, and (2) between the recent European Union members or candidates and the more senior E.U. members. The paper will also investigate the direction and the significance of any correlation between antitrust implementation effectiveness and foreign direct investment inflows.