Optimal Institutional Structure of Competition Authorities Under Reputation Maximization: A Model and Empirical Evidence from the Case of Russia
We contribute to the debate on the optimal structure of Competition Authorities (CAs), a debate of particular relevance in younger developing country jurisdictions. We propose a model of a reputation-maximizing CA in which reputation is increasing with enforcement success. This predicts that generalist CAs will focus on decisions in activities with low probability of annulment and low investigation and litigation costs and that this could be detrimental to welfare (relative to the more balanced activity portfolio of specialist CAs). We use a data set of appealed decisions of the Russian CA to provide an empirical support for the model’s assumptions and predictions.