Competition and Political Power

A controversial debate in contemporary competition policy is over whether antitrust should be used to protect democracy by limiting the political power of large firms. In the presented paper the authors address this question by examining the relationship between firm size and political competition. They uncover a dynamic that is missing from this literature—an asymmetry in firm-government relations that facilitates the capture of large firms by politicians. The authors argue that attempts by antitrust regulators to fight this problem may make it worse.