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 Source:

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 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 Australia OECD - Total "Hilmer reforms": competition assessmentof 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), 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 MANUAL Competition Assessment Toolkit Vol 3: Manual Detailed database of literature on liberalisation effects Forthcoming 2015 Factsheet on the links between competition, productivity and growth 2014