Research / BFI Working PaperOct 17, 2018

Trade Openness and Antitrust Law

Anu Bradford, Adam Chilton

Openness to international trade and adoption of antitrust laws can both curb anticompetitive behavior. But scholars have long debated the relationship between the two. Some argue that greater trade openness makes antitrust unnecessary, while others contend that antitrust laws are still needed to realize the benefits of trade liberalization. Data limitations have made this debate largely theoretical to date. We study the relationship between trade and antitrust empirically using new data on antitrust laws and enforcement activities. We find that trade openness and stringency of antitrust laws are positively correlated from 1950 to 2010 overall, but the positive correlation disappears in the early 1990s as a large number of new countries adopt antitrust laws. However, we find a positive correlation between trade openness and antitrust enforcement resources and activities for both early and late adopters of antitrust regimes during this period.