Should Australia Encourage Developing Countries to Adopt Competition Laws?

Henry Ergas
JEL codes: 
ASIA Pacific Economic Paper No. 376 2008

Requiring developing countries to adopt competition laws has become a standard element in Free Trade Agreements between those countries and developed countries, and in the check list of measures sought by the World Bank and other multilateral institutions. However, there is little reason to think competition policy will increase welfare in those countries, especially as its proper implementation requires institutional capabilities that most developing countries lack. Despite this, the ASEAN countries, along with many other developing countries, have adopted competition policies that mirror all the prohibitions typically found in developed countries. It is suggested that it would be preferable were those prohibitions dropped, and competition policy refocussed on to a narrower set of instruments and objectives.