Transcript Eberhard Feess, Frankfurt School of F M, Germany

Eberhard Feess
Summary of first session: Potential lessons for
CREW
Two different issues
Owen: Impact of a bundle of sector-relevant
measures (deregulation, removal of barriers to
entry,…) on sectors (and beyond)
Natalie: Impact of enforcement of competition law
My procedure
• Discuss insights from the two presentations
separately;
• Some points of the discussion referring to both
presentations.
Owen
(not very controversial)
1) Identifying and quantifying direct
impacts on sectors
- Core of CREW
- Plenty can be learned from Australia
- Factors: Prices, productivity,…
but also: quality (waiting loops), impact on
single firms…
- Key-points for data
-
Before-after required
Data for difference-in-difference
Timing issue (already implemented - then
primary data collection is excluded - or not
2) Estimating economy-wide
impacts
- Computable GEM: Methodologically
advanced, prohibitively high data
requirements (?)….and should be
complementary to World Bank Studies (?)
- Not the core of CREW, but still very
important (see agriculture example). “Soft”
analysis: Links between sectors, sectors
most directly affected, interviews,
qualitative assessment…
3) Disentangling the impact of
different measurements
- Generally important for CREW (?), but:
Hardly possible with “hard” analysis: Panel
data with sufficient variation and
observations would be required.
- Again: “Soft” analysis: Links between
sectors, sectors most directly affected,
interviews, qualitative assessment…for
identifying which of the parts of the reform
are crucial.
Natalie
(far more controversial)
1) CS vs. CS+PS
Pros:
-
Pragmatism
Due to positive long-term (“dynamic”) effects,
static CS may be a better proxy for long-term
welfare than static CS+PS
Cons:
- Violates usual definitions of welfare
- Neglecting negative (short-term) impacts on
firms may jeopardize acceptance
- Is it really CS (at least in ex-ante assessment)
or just price reduction times quantity (if its about
CS, how is E(p) calculated?)
Question:
-
Shall CS and PS really be estimated in CREW?
Or restrict attention to prices, productivity,
quality…
2) Ex-ante vs. ex-post perspective
Ex-ante: Which effects will the removal of the
violation have?
- Recommended thanks to its simplicity
- Restricted to impact on consumers
- Discussion: may be important if
policymakers need to be convinced
about action to be taken
- However:
-CREW is about the empirical
assessment of measures
- 10-15% for cartel, but for abuse?!
Ex-post: Which effects did the
removal of the violation have?
-
Seen as far more problematic for CREW due to
data (before-after required, an 3 years may be
too short)
-
Ex-post if far more ambitious both wrt scope
(e.g. product selection) and methodology (e.g
structural models; all in all closer to sectoranalyses presented by Owen)
-
But: Is the simplicity really driven by ex-ante vs.
ex-post or more owed to decisions on scope
and methodology?
-
For instance, the impact of prices as estimated
ex-ante can simple be observed ex-poast…
3) Going beyond single
interventions: Deterrence effects
of competition policy
- done with surveys by the OFT
- There are also a few econometric evidence
on cartel prevention, in particular triggered
by corporate leniency programs
- Though interesting, this is not part of the
CREW-project (?)
Mixed important aspects from discussion
(I drop everything related to political economy-aspects and advocacy)
Data and methodology:
- Take data where you get it from and work with even
poor data
- Apply different methodologies and adjust it to data
availability (incl. qualitative assessments)
- BUT:
-
Before-after-comparison required
Difference-in-difference would be extremely valuable
Between countries-methodologies should be the same (?)
No oversimplified econometrics (Tansanie-study; GMM)
Factors to be taken into account:
- Factors agreed upon: Quality, distribution…
- Factors emphasized by many but difficult:
-
Employment
Poverty reduction