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 sector-analyses 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