Institutional Rigidity, Property Rights, and Market Competition in Advanced Economies: Evidence from a Macro-level Competition Index

This research focuses on institutional rigidity in developed countries, specifically regarding the overly strong and entrenched property rights. To examine whether excessively powerful property rights, beyond the general level, constrain market competition in these advanced economies, we reconsider the stagnation economy hypothesis. Drawing on a balanced panel of 50 countries for the period 2010–2023, the studydeveloped a macro-level competition index grounded in operating surplus-based market power measures. To address endogeneity and dynamic persistence, we employ a multi-method strategy encompassing the difference generalized method of moments, fixed effects, Autoregressive Distributed Lag, and instrumental variable estimators. Furthermore, we show that the competition index is negatively correlated with price-cost margins, and that a negative relationship is observed between reinforced property rights and competition in a fixed-effects event study. Across all specifications, property rights exhibit a robust negative association with competition. By contrast, the quadratic terms of property rights suggest nonlinearity but lack consistent significance, indicating no stable inverse-U pattern. These findings suggest that higher levels of property rights protection may be consistent with institutional rigidity and co‑move with lower levels of market competitiveness. By introducing a novel cross-country metric and demonstrating the empirical patterns associated with overprotection, this study advances the empirical discourse on institutional design and market efficiency. These results have implications for reconsidering the use of underutilized property assets, intellectual property regimes, and the governance of passive investment vehicles, highlighting the tensions between ownership security and the vitality of competitive markets. JEL classification codes: C23, D02, K11, L40, O43