Christall Clear

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Christall Clear
Jakob van der Waarden Masja Stefanski Tjalling de
Vries

• A better insight in market transparency

Broodje MW/AEP 26 november 2002
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Presentation Outline

• Why this report?
• Decision tree
• Concluding remarks

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Why this report?

• Consumers cant see the forrest for the trees
• Government ranger on some markets

• But Chopping trees is costly
• And Government not necessarily the best ranger

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Central question

• When is government intervention to increase
  transparency desirable?

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Primer considerations

• Transparency not a goal in itself
• Social welfare as objective

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Decision tree
1. Lack of transparency?
2. What causes the lack of transparency?
3. Possible remedies
4. CBA most suitable remedies
5. Focus on other market failures
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Step 1 Is there a lack of transparency?

• Consumers lack insight in
• suppliers
• price
• quality
• production process
• contractual conditions
• Indicators
• Consumer complaints
• Searching costs

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Step 2 What causes the lack of transparency?

• Information not
• Accessible
• Understandable
• Reliable
• Comparable

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Step 3 What are the possible remedies?

• Selfregulation by market parties

• Marketparties act, supported by the government

• Government creates transparency

• Government enforces transparency by law

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Step 4 CBA possible remedies

• Quantification social benefits
• Competition effect
• Less markets for lemons
• Quantification social costs
• Anti-competitive practices
• Administrative and other costs

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Step 5 Take other market failures into account

• Combination with measures that tackle other
  market failures
• Higher visibility other market failures

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Concluding remarks

• The government is not always the best ranger
• Chopping trees can be a costly business
• Decision tree helps to analyse transparency
  issues in a structured way
• But the proof of the pudding...