Factors of Failure of Competition Regulatory Policies in Developing Countries, a Systematic Review of the Literature

Document Type : Research Paper

Authors

1 Ph.D. Student, Public Policy and Administration, Faculty of Management and Accounting, Allameh Tabataba’i University, Tehran, Iran.

2 Professor of Public Administration, Faculty of Management and Accounting, Allameh Tabataba’i University, Tehran, Iran.

3 Associate Professor, Faculty of Management and Accounting, Allameh Tabataba’i University, Tehran, Iran.

4 Assistant Professor, Department of Management, Science and Technology, Amirkabir University of Technology,Tehran, Iran.

Abstract

Abstract
This study systematically reviews the literature on the failure of competition regulatory policies in developing countries. While competition regulation is widely recognized as a key mechanism for enhancing efficiency, innovation, and consumer welfare, many developing nations that established regulatory bodies since the 1980s have faced limited success. Using a systematic literature review of one hundred studies, of which ten met the inclusion criteria, this research identifies six main factors contributing to policy shortcomings: (1) structural and institutional design problems, such as insufficient independence and authority of regulators; (2) limited technical and financial capacity for law enforcement; (3) political economy constraints and state intervention; (4) inefficiencies within judicial systems; (5) underdeveloped markets and weak economic structures; and (6) a lack of competition culture and public awareness. By mapping these recurring challenges and highlighting gaps in the literature, the study offers a comprehensive framework for understanding why competition regulatory policies often fail in developing countries and provides insights for more effective policy design and implementation.
 Introduction:
One of the topics consistently addressed in classical economic literature is that, given favorable conditions, it is through competition that consumer welfare and overall welfare, including both consumer and producer welfare, are maximized in any market. Moreover, competition is essential in the medium and long term for achieving productive efficiency and innovation (Rahbari et al., 2013). Consequently, various governments employ different policies to promote competition in markets and industries to enhance productivity and innovation. One such policy for fostering competition is competition regulation. Today, competition regulation is a crucial component of economic governance in most developed and developing countries, aimed at improving the quality of goods and services, fostering business development, and increasing consumer welfare (Alaeddini & Shiri, 2016). From an economic perspective, the most common cause of market failure, justifying government intervention and regulation, is the formation of monopolies (Baldwin et al., 2011). Hence, many countries have specific laws to protect competition or prevent anti-competitive behavior under terms such as antitrust laws or competition laws. These laws prohibit anti-competitive behaviors such as "anti-competitive agreements," "abuse of dominant position," "mergers and acquisitions," "attempts to monopolize," and "discriminatory practices in transactions" (Whish & Bailey, 2021) (Alaeddini & Shiri, 2016) (Jafarzadeh & Ansari, 2014). Furthermore, one of the critical structures of economic governance is competition regulators, responsible for enforcing competition policies and laws. These regulators continuously monitor markets for monopolistic entities and potential anti-competitive behaviors, ensuring fair competition (Motta, 2004).
Case Study: However, developing countries that began establishing competition regulatory bodies and implementing related policies gradually from the 1980s have experienced diverse outcomes, often marked by failure or shortcomings. In the public policy literature, such a significant policy, along with its tools and components, has been less examined and evaluated.
Materials and Methods: This article attempts to review studies that evaluate or investigate the causes of failure/shortcomings of competition regulatory policies in developing countries, creating an overall framework of the emphasized points and identifying gaps in the literature. To this end, a systematic literature review method was employed. Initially, one hundred articles were selected, and after multiple screenings, ten final studies were chosen that addressed the topic in developing countries.
Conclusion: An analysis of these studies revealed a general framework of the literature on the subject, emphasizing six main factors:1) Structural and institutional design problems – such as the independence of the regulator, lack of sufficient power and authority, and exemptions granted in the law. 2) Technical capacity for law enforcement – including shortages of financial resources, specialized human resources, and access to data and information. 3) Political economy conditions. 4) Inefficient or defective judicial systems. 5. Underdeveloped markets or economies in a country. 6) Weak competition culture.

Keywords

References

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Public Management Researches
Volume 18, Issue 69 - Serial Number 69
September 2025
Pages 123-154

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