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Antitrust Policies and Profitability in Nontradable Sectors

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  • Timothy Besley
  • Nicola Fontana
  • Nicola Limodio

Abstract

Firms in tradable sectors are more likely to be subject to external competition to limit market power, while nontradable firms are more dependent on domestic policies and institutions. This paper combines an antitrust index available for multiple countries with firm-level data from Orbis covering more than 12 million firms from 94 countries, including 20 sectors over 10 years and finds that profit margins of firms operating in nontradable sectors are significantly lower in countries with stronger antitrust policies compared to firms operating in tradable sectors. The results are robust to a wide variety of empirical specifications.

Suggested Citation

  • Timothy Besley & Nicola Fontana & Nicola Limodio, 2021. "Antitrust Policies and Profitability in Nontradable Sectors," American Economic Review: Insights, American Economic Association, vol. 3(2), pages 251-265, June.
    • Handle: RePEc:aea:aerins:v:3:y:2021:i:2:p:251-65
    DOI: 10.1257/aeri.20200316
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    References listed on IDEAS

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    1. Michael W. Nicholson, 2008. "An Antitrust Law Index For Empirical Analysis Of International Competition Policy," Journal of Competition Law and Economics, Oxford University Press, vol. 4(4), pages 1009-1029.
    2. Anu Bradford & Adam S Chilton, 2018. "Competition Law Around The World From 1889 To 2010: The Competition Law Index," Journal of Competition Law and Economics, Oxford University Press, vol. 14(3), pages 393-432.
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    Cited by:

    1. Sugata Marjit & Rashmi Ahuja & Abhilasha Pandey, 2021. "Education, Lack of Complementary Investment and Underemployment In an Open Economy," CESifo Working Paper Series 9278, CESifo.
    2. Babina, Tania & Barkai, Simcha & Jeffers, Jessica & Karger, Ezra & Volkova, Ekaterina, 2023. "Antitrust enforcement increases economic activity," Working Papers 332, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    3. Asatryan, Zareh & Baskaran, Thushyanthan & Birkholz, Carlo & Gomtsyan, David, 2021. "Favoritism and firms: Micro evidence and macro implications," ZEW Discussion Papers 21-031, ZEW - Leibniz Centre for European Economic Research.
    4. Tania Babina & Simcha Barkai & Jessica Jeffers & Ezra Karger & Ekaterina Volkova, 2023. "Antitrust Enforcement Increases Economic Activity," Working Papers 23-50, Center for Economic Studies, U.S. Census Bureau.
    5. Crescioli, Tommaso & Martelli, Angelo, 2022. "Beyond the Great Reversal: Superstars, Unions, and the Euro," Single Market Economics Papers WP2022/8, Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (European Commission), Chief Economist Team.
    6. Gábor Koltay & Szabolcs Lorncz & Tommaso M. Valletti, 2022. "Concentration and Competition: Evidence from Europe and Implications for Policy," CESifo Working Paper Series 9640, CESifo.

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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations

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