Harmonising National Competition Policies When Markets are Global

by

P. J. LLOYD and Martin RICHARDSON


Abstract

As barriers to cross-border trade in goods, services and capital are lowered, commodity markets are becoming global but they are not all contestable. Competition policies are carried out by national competition authorities within national jurisdictions. Harmonisation of national competition standards is one way of addressing cross-border competition problems. Only a few papers have analysed the effects on national welfare of harmonisation of national competition standards and these have been confined to cartels or merger standards. This paper builds a model of a multi-country market which is not contestable and considers the harmonisation of national competition standars relating to market access. In most circumstances the harmonisation of standards which improves welfare in all coutnries si one which is pro-competititve. This is contrary to those who fear that harmonisation will result in a "race to the bottom". If world trade in goods and services and capital were completely free, there would be a reduced but still positive role for the harmonisation of policies among nations.