Simon J. Evenett

1

Analytical Considerations In The Design of
Regional Rules on Competition Law.
Simon J. Evenett CPFTR Mid-Term Meeting, 26 April
2005.
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Organisation of this presentation.

• Motivations for this paper.
• Preliminary comments.
• Three literatures.
• Focus on federalism literature.
• Implications for policy.

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Motivations for this paper.

• Recent revival of interest in bilateral and
  regional agreements, many with provisions on
  competition-related matters.
• If regional rules on competition law and
  enforcement are the answer, then what is the
  question?
• Any insights from economic literatures,
  especially those relating to the allocation of
  responsibilities to different levels of
  government.

4
Preliminary remarksbounding the scope of the
paper.

• Nature of regional rules.
• Types of anti-competitive act
• State.
• Private.
• Three literatures
• Economics of international collective action.
• Federalism literature.
• International relations.

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Economics of international collective action.

• Private enforcement against cartels
• Deterrence approach
• dT p FgtG
• Steps to raise p.
• Steps to lower T.
• Steps to raise F.

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Economics of international collective action.

• Mergers with cross-border effects.

U1
U2
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Economics of international collective action.

• Mergers with cross-border effects.

U1
U2
8
Economics of international collective action.

• Mergers with cross-border effects.

U1
U2
9
Economics of international collective action.

• State aids.
• Literature on subsidy games.
• Prisoners dilemma.
• Commitment device needed, along with enforcement
  to back it up.

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Federalism and antitrust.

• First generation literatureemphasised allocation
  of responsibilities.
• Easterbrook (1993).
• Hahn et al. (2003).
• Second generation literatureemphasised market
  preserving federalism.
• Qian and Weingast (1997).
• Oates (2004).
• Inman and Rubinfeld (2004).

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Implications of first generation literature.

• Reasons for centralising functions in a regional
  body.
• Presence of cross-border spillovers.
• Economies of scale in enforcement.
• Avoiding races to the bottom.
• Paucity of expertise at national level.
• Reducing likelihood of interest group capture of
  enforcement agency.
• Reasons for retaining functions at national
  level.
• Diversity of values.
• Preserving opportunities for experimentation.

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Other notes on federalism literature and regional
rules.

• What does the first generation literature really
  provide an explanation for?
• Second generation literature.
• Motivation by experience in developing countries.
• Market preserving federalism.
• Policy implications of analysis so far
• Rationales for minimum standards.
• Rationales for regional agencies.