PRODUCT MARKET REGULATION REFORM: OPERATIONAL METHOD & QUANTIFICATION IMF-OECD-WB Conference on Structural Reforms 11 June,2018 Paris Sean F. Ennis, Senior Economist, OECD Competition Division The views expressed here are those of the author and do not purport to represent the views of the OECD or its members
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PRODUCT MARKET REGULATION REFORM:
OPERATIONAL METHOD & QUANTIFICATION
IMF-OECD-WB Conference on Structural Reforms 11 June,2018 Paris Sean F. Ennis, Senior Economist, OECD Competition Division
The views expressed here are those of the author and do not purport to represent the views of the OECD or its members
• Structural reform of labour and product markets regularly espoused by governments
• Structural reform is key to enhancing productivity and restarting growth
2
Motivation: The missing link
• Industrial organisation economics demonstrates
– forces leading to regulatory restrictions and
– impacts of such restrictions
Mean price change (ρ) (absolute value in ratio of
price decline)
Range # of
studies
Category and sub-category of regulatory restriction
0.21 115 (A) Limits the number or range of suppliers
0.23 -0.9 to -0.006 35 1 Grants exclusive rights for a supplier to provide goods or services
0.12 -0.31 to -0.003 10 2 Establishes a license, permit or authorisation process as a requirement of operation
0.17 -0.416 to -0.040
15 3 Limits the ability of some types of suppliers to provide a good or service
0.24 -0.75 to -0.002 41 4 Significantly raises cost of entry or exit by a supplier
0.13 -0.36 to -0.04 10 5 Creates a geographical barrier to the ability of companies to supply goods services or labor, or invest capital
3
Ex post reform studies
Source: Ennis (2018)
4
Distribution of cartel overcharges
Connor and Lande (2008) as reported in Oxera and Komninos (2009)