Measuring the benefits
John Davies, Head, Competition Division
November 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 Value, €m
provisions
affected
“Fresh” milk
€33m (consumer benefit/year)
2
33
Levy on flour
€8m-11m (value of levy/year)
€2.5bn (annual expenditure), plus
30,000 new jobs
1
8
3
2 500
9
740
23
102
Sunday trading
Sales and discounts
Over the Counter
pharmaceuticals
€740m (annual turnover)
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
???
€102m (consumer benefit/year)
Source: http://www.oecd.org/greece/greececompetitionassessment.htm
Forthcoming Toolkit Vol 3: Literature
summary for impact of deregulation
Mean price
change
Price effect
Number of
studies
Category 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
We welcome suggestions
for additional case
studies!
All fully referenced in OECD Competition Assessment Toolkit
Volume 3 (OECD – forthcoming 2015)
Competition and growth
“Factsheet on the links between competition,
productivity and growth”, OECD 2014
Competition and growth
8
Smoothed* GDP growth: Australia and OECD
average
6
4
2
Australia
OECD - Total
0
-2
-4
"Hilmer reforms":
competition assessment of
all new and existing laws
and regulations
Source: OECD. *Three-year moving average
Competition and growth
Product Market Regulation and average total factor productivity
Source: OECD, using Indian National Accounts statistics
Competition and growth
Distribution
ofTotal
Total
Factor
Productivity
between
manufacturing
plant
Distribution of
Factor
Productivity
between different
manufacturing
plant (mean
= 1)
Source:
Hsieh Hsieh
and Klenow
© Published
the permission
of “Factsheet
Oxford University
Press
Source:
and (2009)
Klenow
(2009), with
referenced
fully in
on the
links
between competition, productivity and growth”, OECD 2014
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.
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.
Employment
All referenced fully in “Factsheet on the links between
competition, productivity and growth”, OECD 2014
Thank you for your attention
Competition Assessment
Toolkit Vol 3: Manual
Detailed database of
literature on liberalisation
effects
Forthcoming 2015
MANUAL
Factsheet on the links between
competition, productivity and
growth 2014
www.oecd.org/competition