By Amit Zac (University of Oxford)
To what extent does the choice of competition law model a relevant factor affecting economic inequality? While competition laws have been suggested as a possible factor contributing to current inequality trends in developed countries, and as a viable instrument to address them, little empirical evidence exists on their distributional effects. The article utilizes a unique estimation strategy based on the textual similarity between competition laws, and the General Synthetic Control method to study the relationship between competition laws and economic inequality. By creating a synthetic counterfactual unit from an OECD donor base of actual observations, we test the link between the USA ‘model of law’ and income inequality across developed countries. We show evidence that the USA model is linked to higher levels of income inequality, compared to the EU competition law model.