Firms Behaving Badly: International Regulation of Anticompetitive Behavior?

In this paper the regulation of international firms by national authorities is exam-ined. Anticompetitive behavior is modeled as strategic sabotage affecting the costs of rivals. Issues explored include welfare implications of sabotage by international firms, benefits from regulation of such behavior, impacts of nationality on incentives for regulation of firms, desirability of mergers, and the importance of nationality of firms for regulators. Firms may prefer enforced regulation of behavior to the unregulated Nash equilibrium. Mergers may prove beneficial as sabotage incentives are internalized. While there are potential gains from an international agreement, countries have similar incentives to cheat as firms