Measuring the impact of competition policy in developing countries

1
Measuring the impact of competition policy in
developing countries

• Dr. Simon J. Evenett
• 11 June 2004

2
Why measurement matters

• Quantification is an important part of the
  evaluating policy effectiveness.
• In many countries competition law and enforcement
  is new, has to prove itself, and to fight for
  public resources.
• There are many enemies of competition law
  enforcement who know what tough questions to ask.

3
Empirical analyses of competition law in
developing countries

• Estimates of the effect of an enforcement
  decision on prices.
• Cross-country studies that relate enforcement
  intensity to economic outcomes.
• Studies of the effects of more intense
  competition on economic outcomes, like
  innovation, productivity, etc.

4
Analyses of single enforcement actions (Event
studies)

• Mexican enforcement against a milk cartel. Oliver
  Solano Castro found that prices fell 7.4 percent
  after enforcement. Generated average monthly
  savings of US 12 million dollars.
• Poultry cartel in Lima. Martha Pierola found that
  the cartel raised prices by about 4-5 percent.
  Harm estimated to be 17.7 million.

5
Active enforcement deterred price increases on
vitamins
6
Closing remarks

• Quantification is important for assessing
  effectiveness and for building support for
  competition law enforcement.
• Enforcement actions for essential commodities
  dont need to result in large price reductions to
  have generate substantial savings for the poorest
  in society.
• Lots more quantification is needed.