Associate Professor of Political Science, Amy Pond, has co-authored two recent articles published in the journal, Business and Politics. Both articles focus on anti-trust policy in regards to international economics and corporate taxation.
The first, titled "Antitrust and corporate taxation", Pond and her co-author, Jonghoon Lee (Arkansas State University) who was a PhD student at Texas A&M during research, look at the relationship between a company's market concentration, their tax levels, and how more or less representative the government is. The piece also featured edits and insights from WashU Political Science faculty and graduate students. Abstract is below and full article can be read on the journal website.
The second article, titled "International economic relations and American support for antitrust policy", examines how international markets shape public support for antitrust in the United States. Pond, along with co-author Ryan Brutger (UC-Berkeley), used media analysis and survey experiments to test their theory and found that individuals are especially concerned with being placed at a disadvantage relative to foreign competitors. Abstract is below and full article can be read on the journal website.
"Antitrust and corporate taxation" abstract:
Although citizens value competitive markets and support small businesses, we observe substantial variation in market concentration. Why do politicians abstain from taking action to reduce concentration? We propose an often overlooked political benefit to concentrated markets: When concentration increases, competition is less pronounced and firms earn larger profits. These profits can be taxed for government revenue or used to reward business-friendly politicians. We expect politicians to impose more lenient competition policies toward firms that provide larger sources of revenue. Moreover, this relationship should be especially strong under authoritarian political institutions, where politicians only weakly value the free market and consumer outcomes and where institutional commitments to unbiased policies are weak. We derive our theoretical claims from a formal model. We draw on both cross-country evidence and evidence from Turkey at the firm and industry level to evaluate our claims. We find that as political institutions become less representative, firms that make higher tax payments tend to control more assets, operate in more concentrated industries, and engage in higher value M&As. Our study points to the weak provision of competition policies as a source of rent-seeking.
"International economic relations and American support for antitrust policy" abstract:
Antitrust policy aims to reduce market concentration and increase competition among firms. Contemporary antitrust is sensitive to both domestic and international considerations. Internationally, the market is dominated by the largest firms, raising questions about the competitiveness of domestic firms and the application of antitrust against foreign firms. Domestically, public support for antitrust is needed for continued enforcement. This paper examines how international markets shape public support for antitrust in the United States. Using media analysis, we find that antitrust is increasingly in the news, and that international competition is referenced in antitrust debates. We theorize that support for antitrust is shaped by concerns for the competitiveness of domestic firms, relative to foreign competition, and that these concerns vary based on individuals’ levels of nationalism. We test our theory using a survey experiment and find that individuals are especially concerned with being placed at a disadvantage relative to foreign competitors. Interestingly, we find that using antitrust laws against foreign firms yields divergent reactions—highly nationalistic Americans increase their support for strong antitrust laws, while those with low levels of nationalism decrease support. The paper highlights the importance of global competition in shaping preferences for domestic regulation.
