measuring the benefits john davies, head, competition division november 2014
TRANSCRIPT
Measuring the benefits
John Davies, Head, Competition DivisionNovember 2014
Quantifying the benefits can help sell competition reforms
1. Short-term consumer benefit (prices, quality, choice)
2. Economic growth
3. Employment, equality and other socioeconomic benefits (or at least demonstrations of ‘no harm’)
But the evidence base for developing countries is often
weak!
Short term consumer benefits
Issue Annual Benefit Number of
provisions affected
Value, €m
“Fresh” milk €33m (consumer benefit/year) 2 33
Levy on flour €8m-11m (value of levy/year) 1 8
Sunday trading€2.5bn (annual expenditure), plus 30,000 new jobs 3 2 500
Sales and discounts €740m (annual turnover) 9 740Over the Counter pharmaceuticals €102m (consumer benefit/year) 23 102
Marinas €2.3m (annual turnover) 10 2
Cruise business €65m (annual turnover) 4 65
Advertising €1.8b (consumer benefit/year) 14 1 800
Everything else ??? 263 ???
Source: http://www.oecd.org/greece/greececompetitionassessment.htm
Forthcoming Toolkit Vol 3: Literature summary for impact of deregulation
Mean price change
Price effectNumber of
studiesCategory and sub-category of
regulatory restriction
Source: OECD Competition Assessment Toolkit Volume 3 (OECD – forthcoming 2015)
Forthcoming Toolkit Vol 3: Literature summary for impact of deregulation
All fully referenced in OECD Competition Assessment Toolkit Volume 3 (OECD – forthcoming 2015)
We welcome suggestions for additional case
studies!
Competition and growth
“Factsheet on the links between competition, productivity and growth”, OECD 2014
Competition and growth
Source: OECD. *Three-year moving average
-4
-2
0
2
4
6
8
Australia
OECD - Total
"Hilmer reforms": competition assessment of all new and existing laws
and regulations
Smoothed* GDP growth: Australia and OECD average
Competition and growth
Product Market Regulation and average total factor productivity
Source: OECD, using Indian National Accounts statistics
Competition and growth
Source: Hsieh and Klenow (2009) © Published with the permission of Oxford University Press
Source: Hsieh and Klenow (2009), referenced fully in “Factsheet on the links between competition, productivity and growth”, OECD 2014
Distribution of Total Factor Productivity between manufacturing plant
But growth is not everything…
Inequality
Welfare loss from monopolised products 1.5x higher in poorest, rural decile, than richest urban decile, in Mexico
Urzua (2009)
Perhaps half of the wealth of the richest households in the USA in the 1970s was derived from monopoly profits.
Connor and Smiley (1975)
Obviously, a very broad-brush conclusion, but of interest especially in the light of renewed interest in inequalities derived from inherited wealth, following Picketty.
Employment
A one standard-deviation decrease in product market regulation would generate a long run gain of 1.1% in the employment rate in France
Fiore et al (2012)
Based on the OECD Product Market Regulation indicators. Effect arises through labour market efficiency.
Zoning regulations in France in the 1970s reduced long-run retail employment by 10%.
Bertrand and Krammarz (2001)
Based on comparative analysis of development of retail sector employment in France and USA.
All referenced fully in “Factsheet on the links between competition, productivity and growth”, OECD 2014
Thank you for your attention
www.oecd.org/competition
MANUAL
Competition Assessment Toolkit Vol 3: ManualDetailed database of
literature on liberalisation effects
Forthcoming 2015
Factsheet on the links between competition,
productivity and growth 2014