Regime legitimation strategies and competition laws in autocracies

Abstract

Competition laws play important roles in safeguarding and promoting competition in an economy. One important question is why some countries adopt strong competition laws, while others do not. Previous studies emphasize the difference between democracy and autocracy and argue that democracies tend to adopt stronger competition laws. However, these studies pay little attention to the fact that autocratic competition policies vary considerably. I argue that autocratic regimes’ legitimation strategies affect their competition policies. Even autocrats care about what ordinary citizens think and will attempt to legitimize themselves. However, autocrats rely on different legitimacy claims to justify their rule. When autocracies justify their rule based on their performance, they more seriously consider economic concentration and anti-competitive practices, which leads them to adopt stronger competition laws. This incentive is much weaker when they rely on other legitimacy claims. I further posit that institutional and external contexts modify the effect of performance-based legitimation strategies. To the extent that performance-based legitimation strategies lead to stronger competition policies, they are more likely to do so either when an authoritarian regime allows electoral competition or when neighboring countries have strong competition laws. I test the hypotheses by using a global sample of autocracies from 1950 to 2010. A comprehensive set of analyses provide strong evidence for the arguments. The result shows that an authoritarian regime’s performance-based legitimacy claims are positively related to its competition laws’ strength, while other legitimation strategies do not positively correlate with the strength of competition laws. Further analysis reveals that performance legitimacy claims significantly interact with electoral competition and the regional prevalence of competition laws to influence competition policies.