Competition Policy, Market Power and Collusion in Developing Countries

The paper aims to examine some of the critical factors that make the implementation of effective competition policy difficult in developing countries. The paper begins by reviewing the variety of factors that have accounted for the rise in interest in promoting competition in developing countries over the past decade. It briefly reviews the various theoretical perspectives on competition as a background to understanding the range of approaches put forward for competition policy. A number of policy-related propositions, drawn from the theoretical literature, are examined and related to policy and practice in developing countries. The discussion focuses on the rivalry for the acquisition of assets in terms of entry and exit constraints and on the rivalry that exists in the use of assets, by considering the factors that facilitate collusion. It provides reasons why anti-competitive practices may be more difficult to detect in developing countries and why competition agencies face obstacles in implementing competition policies.