Thank you so much for the very kind introduction.
The talk today will probably rather an unusual talk
for a lawyer, because it's an empirical study which
is somewhat related to law, but it's probably rather unusual.
I don't know.
I've heard that half of you are economists, half of you
are lawyers about, so I will explain the statistics
in great detail what I do.
So at least if you say you're all experts in statistics,
then I will just go over it.
But I don't know.
Is it necessary to explain the statistics in more detail?
OK, great.
I'll do so.
OK, if we look at antitrust law, usually antitrust law
is a rather technical field of law.
So you have your very, very detailed provisions,
and it can be very technical.
But there's one meta discussion in antitrust law
which is much more philosophical and where
every big name, at least in German academia,
every law professor who is in the field of antitrust law
has written something on this topic,
and that's about the normative goals of antitrust law.
What's this discussion about?
So basically, it's about why do we have antitrust law?
So what's the purpose of having an antitrust law?
And defining the goal is relevant because then we
can interpret certain provisions.
We would define it differently depending on the goal
we assume that antitrust law has.
So the most obvious goal of antitrust law
is probably promoting general economic welfare.
And then we can divide two schools.
Some say, well, it's just about efficiency.
So antitrust law is about enhancing efficiency.
Others say, well, it's not just about efficiency.
It's also about distribution.
So it's not about whose welfare.
It's not just that welfare has to be increased,
but it's also about whose welfare is increased.
So the European Commission, for example,
says antitrust law is for increasing consumer welfare,
so not the welfare of the big companies,
but for the increase of consumer welfare.
And finally, there's a German origin Freiburg school
which says, well, it's not so much about economics.
It's not about welfare, but it's more about freedom.
So antitrust law is that people can freely
decide which company they want to make a contract with.
Because if there's just one company in a certain field,
we don't have a choice.
But if we have several companies,
we have a choice of the company we can contract with.
We can even think this argument, this freedom argument,
further.
There are some people who say, well, it's not just about
the individual freedom, but antitrust law
is also good to promote democracy.
So why democracy?
So we can see here that the introduction
or the main goal for the introduction of antitrust law
in Germany after the Second World War
was not so much that you wanted to build up the German economy.
It was rather to prevent the cartelization
of the German economy, because there
was some belief that the cartelization of the German
economy was one of the reasons for the Third Reich.
And we also find major economists
like Milton Friedman who say dispersion of economic power
is a necessary counterbalance to the centralization
of political power in order to preserve freedom.
So we have these two different goals.
On the one hand side, rather economic goals,
enhancing welfare.
On the other hand side, we have something
like increasing liberty and democracy.
This is a normative discussion.
And we can't decide a normative discussion
by making empirical arguments.
But what I wanted to do in the study
was, well, what effect does antitrust law actually have?
Does it enhance welfare?
Does it enhance democracy?
So that's about the question.
And if we say, well, from the outset, democracy or antitrust
law doesn't serve the purpose of enhancing democracy
or doesn't serve the purpose of enhancing general welfare,
then we might rethink whether this might
be a good goal of antitrust law.
Very briefly on the existing literature in this field,
basically we don't find anything about the effect of antitrust
law directly on democracy.
At least I haven't seen any empirical study on that.
What we find is some other literature
on factors enhancing the stability of democracy
or making transition to democracy more likely.
So we have, for example, these studies
of van Hahnen and Bosch who say that democracy is strengthened
by a deconcentration of social, economic, and so
on political resources.
And so there we can already see a connection
to the topic we are talking about tonight.
And then we have a huge discussion
about whether economic development promotes
democracy.
So whether a transition to democracy
or a stabilization of democracy is more likely
if a country is more economically developed.
And we have positions from all over the board.
We have people who say, well, economic development promotes
democracy.
We have people who say, well, it doesn't promote
the transition to democracy.
But it at least stabilizes the democracy
once it is established.
And we have people like Archimoglu
who say, well, economic development basically
has no effect on democratization.
There's no effect whatsoever.
Then we have the literature on the effects of antitrust law.
And here we have different studies.
Most of these studies are concerned
with the effect of antitrust law on actually competition.
So does the existence of a competition law
further the competition in a country?
And we have another strand of literature
which tries to figure out whether there's
an effect on other economic indicators.
So we have some studies which say
there is a positive effect on economic growth and welfare.
We have studies which show that there's
no effect on the level of competition
depending on how you measure the existence of a competition
law.
And we have studies which try to rate the effectiveness
of a competition law.
And then if we can rate the effectiveness,
we find that there is a positive effect
on the level of competition or on factor productivity.
To the theoretical argument, I guess
the theoretical argument for why antitrust law should
enhance economic welfare should be rather familiar.
So I don't want to spend too much time on that
and rather concentrate on the rather
anti-intuitive link on antitrust law and democracy.
The argument has two steps.
First step is antitrust law decreases the concentration
of economic resources.
So I don't know.
Do I have to explain that when we have antitrust law,
we kind of try to prevent monopolies from emerging.
And this means that companies usually
are prevented of pricing their products to monopoly prices.
So we have lower prices.
And thus, we have higher consumer welfare.
That's, in a nutshell, very simplistic the argument
for why antitrust law decreases the concentration
of economic resources.
The second step is probably the more difficult one.
And there it says the concentration
of economic resources destabilizes democracy
and makes transition to democracy less likely.
Why this so?
We have two dimensions, again, of this argument.
First, we have a certain economic elite.
Let's assume we have a certain economic elite.
In a very concentrated economy, we have an economic elite.
And first, we say this economic elite
has an influence on the form of government.
Second, it has an incentive, if there's
a high concentration of economic resources,
to oppose democratic transition or to work towards a destabilization
of democracy.
First, influence of economic elites.
Every dictator needs to pay his military,
needs to pay his police forces, has
to build a certain infrastructure.
So every government needs economic resources.
Where does the government get the economic resources from?
Basically, from these economic elites that
support the government.
So that's why I think it's fairly reasonable to assume
that there is a strong influence of an economic elite
on the government.
Second, does this economic elite have incentives?
And the argument, especially Bosch, makes this argument very clearly.
The argument is democracy usually has a redistributive effect.
So we probably have a pyramid of income.
So we have in every society.
We have few at the top.
And we have more people at the bottom of this pyramid.
So this pyramid might look like this, or it might look like this.
Depending on which in which society we are living in.
But probably, we always have this kind of pyramid.
So the more, the higher the concentration of economic resources is.
So the more inequality we have in a society,
the more is the incentive of the people at the bottom
to redistribute income from top to bottom.
And democracy, as it is, a form of state where the majority rules,
at least in principle, we can discuss this.
But as a form of state where the majority rules,
if we have the majority at the bottom, they
have strong incentives to implement redistributive measures which
redistribute the money from those at the top to those at the bottom.
And so the more divergent the society is, the greater these incentives are.
If we have a totally equal society, there's
no incentive for redistribution.
And so there's no incentive for economic elites,
if there are any, to oppose the transition to democracy.
If there's a high inequality, then these elites at the top,
because they know democracy can endanger their status,
they have a high incentive to oppose the transition to democracy.
And so they will pay for opposing this transition to democracy.
So that's basically the theoretical argument
behind this link between antitrust law and democracy.
Now to the empirical part.
And here I start with a short lesson in statistics.
So what we want to measure is we want
to measure the effect of the existence of an antitrust law
or competition law, call it C, on democracy.
So basically, we want to see whether competition law has
a positive effect on democracy.
Now we have basically three issues.
First, we have to measure democracy and competition.
Which is, I mean, especially measuring democracy
is not an obvious task.
So I will address these in the next two slides.
Then we have to look how we make the statistical design.
Basically, what we have, we have different countries which
have a certain democracy score, and which either have or don't
have a competition law or competition
law of a certain effectiveness.
So we have different pairs of data, competition and democracy,
C and D. And now we can make a correlation
of this pair of data.
So we can basically say, does the existence,
does countries which have a competition law,
have an average, a higher democracy score or not?
So we can calculate a factor by how much
the existence of a competition law
can increase the democracy score of a country.
This is a correlation.
Even if you aren't familiar with statistics,
probably you already have heard the sentence
that correlation doesn't prove causation.
I don't know.
So why is that so?
There are basically two reasons.
If we find a correlation between competition and democracy,
there are two reasons why we might not
conclude that competition law causes an increase
in the democracy score.
First, it might be that the causation
is in a double direction.
So it might be it's just that democracies are more likely
to have a competition regime, and so
we have a high correlation.
But it's not that the competition regime
is causing any increase in the democracy score.
That's the first problem we have to deal with.
The second one is we have things like spurious correlation.
So there are certain other factors, A, B, C,
which might influence both democracy and competition.
So let's, for example, we can observe a high correlation
of heights of siblings.
So if we take pairs of, let's say, brothers
and look at whether the height of them
is just randomly distributed or whether there's
some correlation, then we can see
if these people have a relationship.
So if they are brothers, then usually there's
a high correlation between the height.
Does this mean that the height of the older brother
causes the height of the younger brother?
No, there's a third factor which causes the height of both,
and that's the height of the parents.
So these are the two points we have
to be aware of when we design our statistical study, when
we make our regression.
First, we have to look for the reverse causation.
Second, we have to control for several factors that
might influence both the democracy score
and the existence of a competition law.
So that's basically all the statistics
you need to understand the rest of the talk, at least I hope.
So if you have any questions, please feel always free to ask.
First, how do we measure democracy?
So basically, the problem when we measure democracy
is we have a qualitative description
of what the political system of a certain state is like.
And now we have to transform it for statistical study
into some kind of number.
So we will always have, we will never
have an exact match of, I mean, translating
some qualitative characteristics into a number.
It's never an exact science.
But there are different ways how we can do it.
And there are two principal ways.
First, we can define democracy in a binary way.
So we can look if a certain country is a democracy or not.
So we just have either democracy or no democracy.
If the country is a democracy, we have a one.
If the country is no democracy, we have a zero.
And then we have to define certain characteristics
of when a certain country is a democracy and when not.
And if a country fulfills this characteristic,
then it gets a one, otherwise it gets a zero.
And if we look at the democracy literature,
most of this literature deals with this binary measure
of democracy.
So they look, is it a democracy or not?
Then there are other ways to measure democracy,
rather gradual scales.
So we can say, well, there's more to it than, I don't know,
what's a democracy?
Is it just the presence of elections?
Or do we need some more institutions,
like rule of law, et cetera?
Do we perhaps need certain individual freedoms?
So we can see that probably there's a continuum.
So we don't have democracies all of one quality
and autocracies all of one quality,
but it's a continuum of different qualities
of forms of state.
So that's why we have measures which say, OK,
0-1 is not detailed enough.
We need a score from 0 to 7 or 1 to 7.
That would be the Freedom House score.
Or I've used for my study the Polity 4 Index.
They go from plus 10, which is perfect democracy,
to minus 10, which is a very developed autocracy.
I decided to use the second index for my study.
Why did I do it?
First, I think these effects that we observe,
that antitrust law have, it's probably not always.
It might be, but it's not always a big effect.
It might be that economic concentration doesn't
necessarily lead to, I don't know,
economic concentration doesn't necessarily
lead to a total breakdown of democracy.
But maybe it leads to that the executive, the president
assumes more power than he should have, et cetera.
So we have these smaller changes we would also
be interested in, which are not captured by this simple 0-1
score.
And that's why I think it's probably more,
we will probably see more when we
use a more detailed scale like the Polity 4 score.
Basically, what is the Polity 4 score?
There are three categories which are measured
by the Polity 4 score.
I've listed them here, presence of institutions and procedures
through which citizens can express preferences
about alternative policies and leaders.
Basically, are there elections?
How fair are these elections?
Institutionalized constraints on the exercise of power
by the executive.
So do we have a president who can basically
do whatever he wants?
Or is he dependent on parliament?
Is there a court scrutiny of his actions, et cetera?
And finally, is there a guarantee of civil liberties
to all citizens?
And then we have a score, and then countries
get a score from plus 10 to minus 10,
depending on how good they score on these three
categories, democracy.
Second issue, measuring antitrust law.
So that seems to be more straightforward than democracy.
We can just look at does a country have an antitrust law
or does it not have an antitrust law?
So like with democracy, we make a 0-1 score and score 0
if it doesn't have an antitrust law and 1
if it has an antitrust law.
There are two problems with that.
First, we have to define what an antitrust law is.
So we have to say, basically, what kind of characteristics
do we want to have that we score to 1
and whether we want to score it to 0?
Second, even if a country has an antitrust law in the books,
this might be nice to show.
But maybe the antitrust authority is not well-funded.
And so the whole institution is not effective.
So just by looking at the law in the books,
we basically can't see whether this antitrust law really
has an effect on the distribution
of economic resources or not.
So what do we do?
There are some proposals in the literature.
Nicholson, for example, proposes an antitrust law index.
And he codes regimes according to the scope in the book.
So he looks at what kind of characteristics are there.
For example, does this antitrust law have a merger control?
If they have a merger control, they get three points.
If they don't, then they get zero on that.
Do they have prevention of dominant
or do they control for dominant market positions?
Then they get certain points.
So you can get points for several characteristics.
And I think it's 0 to 29 or something.
The problem with this antitrust law index
is also that just the formal scope
doesn't tell us much about the effectiveness and practice.
And probably my intuition would be
that probably the effectiveness and practice
is more important than the formal scope of the law
in the books.
Stefan Fucht did a study where he used survey data
on the effectiveness of antitrust law in practice.
So he sent surveys to or questionnaires
to antitrust institutions and got some idea of the funding,
of cases, how many cases do they have,
how successful are these cases.
And so he tried to make a score out of this data.
And this would probably be the most useful index
for my study.
The problem with that is in order
to get around this endogeneity problem,
I think that I need time series data.
And the data set is just one point in time.
So that's the problem why I won't
be able to use this data set for my study.
Finally, you can use survey data of the World Economic Forum
on the perceived effectiveness of anti-monopoly policy
as proxy for effectiveness.
So World Economic Forum basically
sends out service to business leaders
and asks them, what do you think?
How effective is the antitrust law in your country?
And then you get a rating from 0 to 7 also.
The problem with this survey is that the data
is quite unreliable.
So first, it's quite volatile.
So you might have, so basically, the data
goes from 4 to 6.3 about effectively.
And then a country scores 4.8 one year, the next year 4.0,
the next year 4.5.
So it goes in a zigzag way.
And so this is already an indication that probably
the data is quite messy.
The second thing is there are certain countries
like Saudi Arabia or Arabia, which
score in the better half of the index
while they don't have an antitrust law,
while there are countries like Italy,
which are in the lower half of the index, which
have an antitrust law.
So this might also be an indication
for why this data might probably not be very reliable.
And I tried some regressions with this data,
but the results are quite messy.
So what did I do?
Basically, I took the binary indicator.
Why can I do that?
Because I still think it's the best choice for this.
I mean, it's not a perfect choice,
but still the best choice.
The worst thing that happens is that we
find that a certain country has an antitrust law.
We score it with one, although the antitrust law
is not effective.
So we should have scored it with zero.
So we overestimate probably the effectiveness
of the antitrust law.
However, if we overestimate the effect of the antitrust law,
then we underestimate the effect on democracy.
So basically, we won't get a significant result.
So if we get a significant result,
this is not due to the measurement error.
When we don't get a significant result,
then this might be due to our measurement error.
But that's probably the direction
we can rather tolerate than the other way around.
And we have to be aware of that.
And I also took this antitrust law index just as a control,
whether you can get some different results with that.
Final problem, I already talked about this problem
of heterogeneity.
Here, we see the development of the democracy score
from 10 years before the introduction of an antitrust
law to 10 years after the introduction of an antitrust
law.
This upper line is the countries that
introduced an antitrust law during the observed time
period, which is from 1960 to 2008, I think.
This year zero is the year where they introduced
the antitrust law.
These are the countries which haven't introduced an antitrust
law until the end of the data set, which is 2008.
And the year zero, in this case, because we don't have
an introduction as point of time,
it's just for the graph.
There, I took the median year of introduction
of antitrust laws for the countries on the upper line.
So basically, which is 1994, I think, in this data set.
What we see is, and that's all I want to show with this graph,
what we see is that countries which introduce an antitrust
law usually have a higher democracy score.
So this problem of endogeneity that
may be a correlation might not be caused by competition
increasing the democracy score, but by countries
with a high democracy score introducing an antitrust law,
we have to take it seriously.
And I will talk later about how we'll deal with this problem.
Finally, control variables.
These are several control variables,
so variables where I think that they can affect
both the democracy score and the fact
that a country has introduced a competition
law, economic performance, so vice versa for the regression
where test the existence of antitrust law
on economic performance.
I have democracy as a control variable, trade openness.
So if a country is more open to trade,
then probably it has a more deconcentrated economy anyway,
and probably it's also more likely
that the competition law is introduced.
And how far this country is dependent on natural resources.
So there I took the export of natural resources.
International environment, the average democracy
score in a year, and finally, the size
of the population of the country.
And afterwards, I say where I have this data from.
So it's mostly the world table of Penn State University
and some data from the World Bank.
Some descriptive statistics.
First, when were antitrust laws introduced?
Here we see Canada and the US, 1989 and 1891.
And then we have some European countries, Japan,
introducing their antitrust laws shortly
after the Second World War.
And then the whole bunch of countries in the data
set introduced their antitrust laws,
basically in the 1990s or in the early 2000s.
The same graph here for economic performance
as I did before with the democracy score.
So here we see what was the level of economic development
when countries introduced an antitrust law
10 years before, 10 years after.
The red line, again, the countries
that introduced an antitrust law.
The blue line is the one that didn't introduce
an antitrust law.
Median of the introduction years, 1994,
is zero line for this blue line.
And we, again, see that countries
that are economically more developed
are more likely to introduce an antitrust law.
Now to the model.
This is the basic model that I calculated.
DIT is basically the democracy score.
DIT minus 3 is the democracy three years ago.
Why do I include the democracy score of three years ago
in our data set?
Let me, again, go to the whiteboard.
This is competition today, democracy today.
We know that competition today, so democracy today
can affect the introduction of a competition law today.
Now I take it three years lack of competition
because I assume that a competition law has some time
necessary for competition or to take some effect.
Probably it won't take immediate effect
the day after it was introduced.
So three years is already, well, I tried with different lags,
but the basic model is a three-year model.
So now we can be quite sure, so if there's a correlation
and there's no other factors, democracy today
can't be the democracy score of today,
can't be responsible for whether three years ago an antitrust
law was introduced or not.
That's impossible because this is the previous event.
What can be is that maybe we had a democracy score three years
ago, and probably there's some relation between the democracy
score three years ago and today, and this might also
influence whether three years ago the competition law was
introduced.
So that's why I have to take the lag dependent variable
as a control into my regression equation.
CIT3 is the existence of competition law or not.
X is the vector of all the control variables,
so of all these variables.
Mu i is a fixed effect, so I assume
that there are certain time invariant factors
for each country which don't vary over time,
but vary over country, so something like culture, which
is very difficult to measure, but which probably
should be introduced in our regression equation.
And finally, EIT is the error term.
Now, how do we estimate such an equation?
Usually, you do a fixed effect estimation,
and what you do in order to get the problem here
is this mu i term.
What you do, usually to get rid of that,
is you subtract the country means from this equation.
For every year, you subtract the country
means from the upper equation.
We can't do this because we have a lag dependent variable
in our equation, and then we would
have correlations between this term and the error term.
So what we have to do, we have to make a first difference
estimation.
So we subtract always the last year from the present year.
So we always subtract IT minus 1 or IT minus minus 4 from IT
or IT minus 1 from T or T minus 4 from T minus 3.
So this is our final regression equation.
Economic performance, basically, for economic performance,
we have the same equation as we had for democracy here,
just that I exchanged democracy score by some measure
for economic performance, which is GDP per capita.
And finally, I did some measure of growth.
And for growth, I assumed that we
don't have this endogeneity effect.
So there, I estimated a normal fixed effect
without a dynamic regression.
I think they are not exactly identical.
I would have to look into the paper,
but it's about, I think, for example,
the international environment factor
that I had in the democracy equation is not in these,
but they are very much overlapping.
So we will see it in the tables.
Why are they not in the tables?
Probably.
Why are the controls like this?
The controls are?
Like this.
Oh, it's.
It's not necessary that you lack them, but there's no harm to.
I mean, I'm not interested in the effect of the controls.
And basically, if I say, look, if I say competition,
I'm interested in the effect of competition on democracy.
So what can go wrong is that we have A, B, C, which
at the same time influence competition and democracy.
And if we have A, T, B, T, C, T, they
can't influence competition.
So that's why I've lacked the controls.
But I think I've talked to some expert in statistics
that it's probably not necessary to lack the controls.
I think I'm on the safe side.
And there's no, I don't think that the results
are different if you don't like the controls.
You would have to be careful if you don't lack democracy,
the lack dependent variable.
If you just lagged once, then you might have some problems
because you might have problems that this
is related with the arrow term.
And then you would have to make an Aralano bond
estimation of the whole thing.
So this saves me of doing Aralano bond.
But I also tried it with Aralano bond.
And there's no difference in the results.
The results.
In fact, on the quality of democracy, we see basic,
I mean, what's really interesting for us are these four columns.
These are the controls.
And we see there's basically no effect of antitrust on democracy.
And I've tried it with different lags, t minus 3, t minus 5,
t minus 10, because you can't be sure whether it's
after three years that an antitrust law has effect.
Is it after five years?
Is it after 10?
So I tried it with different lags.
And I also tried it, Ali is this antitrust law index
of Nicholson that I introduced a few minutes ago.
And we also see that there's no effect.
What we see is here, t minus 5, we
have a very moderately significant, so slightly
significant effect.
So it's p smaller than 10%.
So there's a 10% likelihood that this effect
was caused randomly and not by the effect.
However, I tried it with t minus 4 and t minus 6,
whether this is maybe just, when you tried with 20 lags,
then probably there's a high likelihood
that by accident one of these will at least
be slightly significant.
And that's probably the case here,
because t minus 4 and t minus 6 are also not significant.
So basically we can say we don't find any positive effect
on the existence of an antitrust law on democracy.
Economic development, here it looks differently.
We find a strongly positive effect
of the existence of an antitrust law
on economic development.
And we see that it's, well, I haven't tested it.
So I can't be sure.
It looks like it's increasing.
So the longer the antitrust law exists,
the more, the stronger this effect gets.
And also when we look at the antitrust law index,
we also have just simply significant,
so it's just one star.
But we also have a significant positive effect
of antitrust law on democracy.
What's interesting is in this fourth column,
I tried to test some interaction effects.
So you see them in the bottom two lines.
I hope that it's visible in the back.
So I tried an interaction between antitrust and democracy
and an interaction between antitrust and trade openness.
And we see that both are the one is weakly significant,
the other significant, but both effects are significant.
So what does this interaction effect mean?
It means that in countries which
are democratic, so first the antitrust democracy
interaction effect, in countries which are democratic,
the antitrust law is more effective.
So the more democratic a country is,
the more effective is the antitrust law, which
isn't that surprising if we think of democracy as,
or the democracy score, not just as a measure for how
much democracy we have, but if we also
think that probably institutions are generally
of a higher quality in a democracy than in autocracy.
So this might be a measure for the quality of the antitrust
regime, this interaction effect.
Yeah?
Sorry, can I ask a question on the previous slide?
Maybe I'd first finish with antitrust and trade openness.
Antitrust and trade openness, that
means that we have a reinforcing effect of the existence
of an antitrust law and trade openness.
So if a country is very open to trade,
then antitrust law is even more effective
than it is in the beginning.
And if I have an antitrust law, then trade openness
has an even bigger effect on economic growth
than it has on its own.
OK, question on the previous slide.
It might be interesting to know whether any of the controls
have the same impact on democracy.
So is this that the effect from antitrust and democracy failing,
or is it that democracy is the primary thing
in anti-attack theory?
I mean, that's a huge discussion.
Well, but we can see it in the results.
Can we?
I mean, if I want to draw, well, OK.
So what we see is that population has a strongly positive effect
on democracy.
International environment, that's not very surprising.
So the more democratic the environment is, the higher
the likelihood that there's a transition to democracy.
But for example, we don't find a significant effect of GDP
on democracy, which is in line with some
of the empirical studies.
Yeah, is it that that's what it's virtually called?
What?
Is it that that's what it's virtually called?
Did you think so?
I don't think so.
I mean, there's really a huge discussion
on what are the factors that drive
transition to democracy or stability of democracy.
Finally, the results of effect of antitrust law on growth.
So if we find that there's an effect on economic development,
we should also find an effect on growth.
And we have strongly significant effects
on growth for all three legs of our antitrust variable.
So I come to the conclusion.
Basically, what we have found is that we
have a strong effect of the existence of an antitrust law
on economic development.
However, we didn't find an effect on antitrust law on democracy.
Does this mean that basically, antitrust law
is irrelevant for democracy?
We might draw this conclusion.
However, I want to have three caveats for why
we shouldn't be too quick to draw this conclusion.
First, the thing, I mentioned the measurement error.
And I said, it doesn't harm us if we find a significant effect.
But if we don't find a significant effect,
because it's a downward effect, it
might be due to this measurement error.
So that we have included some countries which
have an ineffective antitrust law as countries
with an antitrust law into our data set.
This might affect our results here.
Second, it might be that the effect is too small
to be measured by the democracy score.
So if we think of economic concentration
having a negative effect on policy,
we don't just have to think of democratic breakdowns.
We can also think of certain companies
lobbying for political decisions in their favor.
And maybe they get their way anyway already
in a democracy, even in a function in a democracy.
So they don't have an incentive to change the system
if they can work within the system.
So economic concentration can be dangerous even
in an established democratic system,
although we might not see any effect on the democracy score.
So that's the second caveat.
And I don't know, lobbying is something
we can't measure in our democracy score,
or the influence of industry on political day-to-day decision
making.
Finally, a point on antitrust law.
So basically, what does antitrust law do,
or what does antitrust law prevent?
Antitrust law is interested in the economic concentration
in certain markets, and maybe not just markets
in a narrow way, also upstream and downstream markets.
So it might be in a little bit broader sense.
But basically, it's about markets.
So it's about whether a certain country has
a dominant position in the car manufacturing industry
or not, whether a certain bakery has a dominant position
in the local bakery industry or not.
But it's not interested in whether there's
a merger of the bakeries and the car industry.
So if the markets are unrelated with each other,
antitrust law is not interested in whether there's
economic concentration or not.
But if we look at what companies have influence on politics,
this might not just be concentration
in a certain market, probably companies
which don't have a dominant position in a specific market
but have a wide variety of different products
and a strong position in several markets
might even be more dangerous for the political process
than countries which have a very strong position
in a particular market.
So that's also one possible reason
why we should be careful with drawing
too quick conclusions from these empirical results.