National antitrust in a global context

Abstract

The effects of national antitrust are studied in a global context based on modeling trade between two countries with a strict specialization in the production of goods. An equilibrium is explained in terms of the choice of the competition protection mode for the case of lack of coordination in law enforcement, on the basis of the accepted assumptions regarding the incentives of the national antimonopoly authorities to act in order to maximize the total welfare on the internal market. This equilibrium entails a case in which national antimonopoly authorities choose to fight only those infringements that lead to negative effects for internal markets and avoid fighting infringements by national companies on export markets. The Pareto-improvement conditions as a result of the adjustment of the competition protection regime at the supranational level are explained, and the boundary conditions for the supranational antitrust in terms of cartel deterrence are identified. The results obtained allow us to demonstrate the sources of obstacles to the formation of a coherent competition policy at the supranational level and to find the conditions under which these obstacles can be overcome. Symmetrical extraterritoriality may be one of the options for providing Pareto improvements, but the costs and ways of its implementation will play a key role in evaluating the efficiency of such a solution.