Monday, October 11, 2010
Posted by D. Daniel Sokol
Michal S. Gal, University of Haifa - Faculty of Law, New York University describes When the Going Gets Tight: Institutional Solutions When Antitrust Enforcement Resources are Scarce.
ABSTRACT: This article seeks to explore whether institutional solutions to antitrust enforcement problems can be transported from one jurisdiction to another. It does so by focusing on the effects of scarce enforcement resources (both financial and human) on optimal institutional design. The prevalence of this characteristic in small, developing and transition economies makes it an interesting and important subject to study. Accordingly, the following question is raised: if a country has a small institutional endowment, can it transplant the institutional structure of another jurisdiction with a large resource endowment and simply shrink it to fit its budget - like the shrinking of the house in Alice in Wonderland - or should it apply a different institutional structure? To answer this question, the article first analyzes the effects of a limited institutional endowment on the effective enforcement of antitrust law. It then analyzes the tools which have been employed or that can be employed to limit such negative effects, such as prioritizing and sharing. One of the more interesting solutions relates to the interplay between substantive rules and institutional structures: a combination of poorly equipped institutions with limited economic expertise and antitrust laws which require complex analysis of market conditions and their effect on welfare are apt to create erroneous decisions; thus, as this article argues, designing an efficient antitrust regime also involves the creation of a delicate balance between institutional conditions and substantive rules.