A Unified International Competition Policy: Panacea or Pangloss?

Abstract

This paper provides reasons why the proposed unified international competition policy may be unnecessary in absence of any trade barrier and create distortions. If trade liberalization is sufficiently achieved, then market forces by themselves may generate competition and efficiency. This paper stresses that either international cartels or vertical restraints cannot suppress competitive forces in absence of any trade barrier. Furthermore, the emergence of an unified international competition policy creates opportunities for rent-seeking that may generate huge social costs. Hence, the existence of this competition policy discourages the motive for promoting competition in some cases, and, at the same time, generates inefficiency.