Competition law and economic inequality

Thesis

Scholars and policymakers have recognized inequality as a major social problem affecting political stability, deteriorating public health, and destabilising crime levels. It is increasingly acknowledged in public discourse that competition law could have important effects on inequality levels. However, the specific ways and mechanisms through which a competition law regime might interact with economic inequality remain largely unexplored from an empirical perspective. The thesis aims to address this literature gap.

The thesis empirical findings support a link between competition law and enforcement and economic inequality via its relationship with the levels of competition. The US case study backs the hypothesis that major changes in antitrust laws may have been correlated with macroeconomic trends of rising markups, declining labour share and rising economic inequality. The thesis also found evidence that countries which adopt the text of antitrust laws (as opposed to EU text) are more likely to show higher levels of economic inequality.

The relationship between the scope of competition law and income inequality was somewhat inconclusive at the macro level using a large cross-country dataset, observing a statistically significant relationship in some specifications, but not all. Nevertheless, I found a positive link, statistically significant, between an effective competition policy and the labour share trend, exploring a data set of highly developed countries. The main mechanism through which competition policy affects the labour share is its ability to constrain markups: competition policy is negatively correlated to markups, while markups are negatively correlated to labour share.

The thesis then explores the implications for further research and policy. I argue that competition law is suited to influence pre-distribution of wealth and income and can be further tuned to accommodate concerns for equality. I offer practical ways to implement my approach via prioritising schemes and a greater focus on low- and middle-classes.

Authors: Zac, A

• DOI: 10.5287/ora-mzxyvr70n
• Type of award: DPhil
• Level of award: Doctoral
• Awarding institution: University of Oxford
• Language: English
• Keywords: competition law; empirical legal studies; inequality; market power
• Subjects: Economics; Law