Het caf

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Seeing Through Transparency
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Some comments on Glashelder Masja Stefanski,
Tjalling de Vries, Jakob van Waarden Ministerie
van Economische Zaken by Marco Haan University
of Groningen
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1. Struggle... 2. Praise 3. More on
transparency 4. More on the proposed decision
tree 5. How to tackle intransparency? I will be
very harsh and unfair...
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• Very well written
• Makes all the right noises
• All possible caveats are mentioned
• In that sense hard to comment on
• The report does an excellent job in making policy
  makers think in the right way about many
  micro-economic issues. But still
• Where do we stand at the end of the day?

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What is transparency? Basically, a catch-all
phrase. It can be anything you like it to be. The
latest buzzword? Any reason as to why markets do
not function the way we like them to, seems to
boil down to lack of transparency. For policy
makers, this is convenient. Now they are always
able to say what is wrong in a market. Lack of
transparency. Voorbeelden van poducten en
diensten waarbij transparantie een issue is, zijn
energie, makelaars, notarissen en taxis.
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Examples of lack of transparency 1. Lemons
problem 2. Hold-up problems (contractual
incompleteness) 3. Market power 4. Search
costs 5. Switching costs 6. Credence goods 7.
Product differentiation 8. Price
discrimination 9. Adverse selection 10. Moral
hazard 11. ...
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By calling all of these problems of lack of
transparency, one gives the suggestion that it
basically all boils down to the same problem. Of
course, nothing could be further from the
truth. These are all very different problems
that require very different solutions. Lack of
transparency can mean anything. Therefore, it
means nothing.
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General impression The market isnt really
able to work for itself. We, as government,
should step in and help those poor consumers
out.
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The decision tree. Suppose person Z has problem
X. How should (s)he tackle that? Try the
following steps 1. Does problem X really
exist? 2. If so, what causes problem X? 3. How
can we solve problem X? 4. Are the benefits of
the solution larger than the costs? 5. Or are
there other solutions with higher net
benefits? This is exactly the approach taken
here, with Z consumers, and X lack of
transparency.
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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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Hence, the decision tree is reasonable, and it
really makes sense. At the same time, it doesnt
really say anything.
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Also note Consumers often like (at least some)
aspect of lack of transparency it gives them
more choice. Twenty years ago, the telecom
market was really transparent... Admittedly,
such caveats are also in the report.
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What is (also) important in a decision tree? 1.
Never be content by only calling something lack
of transparency. Always be more precise and
specify the exact economic problem. 2. The
market is often able to solve many
intransparency problems for itself... 3. If
not, first pose the question as to why market
participants do not have the incentive to provide
the necessary information. Try to give them that
incentive. 4. Only then, legislate or regulate.
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The End
(And again I have been unduly harsh and
unfair...)