nep-com New Economics Papers
on Industrial Competition
Issue of 2005‒06‒14
28 papers chosen by
Russell Pittman
US Department of Justice

  1. Collusion in Growing and Shrinking Markets: Empirical Evidence from Experimental Duopolies By Klaus Abbink; Jordi Brandts
  2. Idiosyncratic Volatility and Product Market Competition By Gaspar, José-Miguel; Massa, Massimo
  3. Advertising and Pricing at Multiple-Output Firms: Evidence from US Thrift Institutions By DeYoung, Robert; Örs, Evren
  4. Mergers with Product Market Risk By Banal - Estanol, Albert; Ottaviani, Marco
  5. Divide et Impera: Optimal Leniency Programmes By Spagnolo, Giancarlo
  6. Privatization and Restructuring in Concentrated Markets By Norbäck, Pehr-Johan; Persson, Lars
  7. Exclusive Dealing, Entry and Mergers By Fumagalli, Chiara; Motta, Massimo; Persson, Lars
  8. Foreign Direct Investment, Competitive Pressure and Spillovers. An Empirical Analysis of Spanish Firm Level Data By Sembenelli, Alessandro; Siotis, Georges
  9. Optimal Sliding Scale Regulation: An Application to Regional Electricity Distribution in England and Wales By Hawdon, David; Hunt, Lester; Levine, Paul L; Rickman, Neil
  10. Do Mergers Improve Information? Evidence from the Loan Market By Panetta, Fabio; Schivardi, Fabiano; Shum, Matthew
  11. Entry, Cost Reduction and Competition in The Portuguese Mobile Telephone Industry By Gagnepain, Philippe; Pereira, Pedro
  12. Two at the Top: Quality Differentiation in Markets with Switching Costs By Gehrig, Thomas; Stenbacka, Rune
  13. Welfare Trade-Offs in US Rail Mergers By Ivaldi, Marc; McCullough, Gerard
  14. Dynamic Monopoly Pricing and Herding By Bose, Subir; Orosel, Gerhard O; Ottaviani, Marco; Vesterlund, Lise
  15. Intermodal and Intramodal Competition in Passenger Rail Transport By Ivaldi, Marc; Vibes, Catherine
  16. The Insiders' Dilemma: An Experiment on Merger Formation By Lindqvist, Tobias; Stennek, Johan
  17. Should Uniform Pricing Contraints be Imposed on Entrants? By Hoernig, Steffen
  18. Strategic R&D Location by Multinational Firms: Spillovers, Technology Sourcing and Competition By Belderbos, Rene; Lykogianni, Elissavet; Veugelers, Reinhilde
  19. SMEs and Bank Lending Relationships: The Impact of Mergers By Degryse, Hans; Masschelein, Nancy; Mitchell, Janet
  20. Alliances in the Air: Some Worldwide Evidence By Gagnepain, Philippe; Marín Uribe, Pedro L
  21. Branch banking, bank competition, and financial stability By Mark Carlson; Kris James Mitchener
  22. Determinants of Cellular Competition in Asia By Chakravarty Sujoy
  23. Tying, Upgrades, and Switching Costs in Durable-Goods Markets By Dennis W. Carlton; Michael Waldman
  24. To Bundle or Not to Bundle By Norman, Peter; Fang, Hanming
  25. The effect on retail charges of mergers in the GB electricity market By Evens SALIES
  27. Reformas Regulatórias e Reestruturação no Setor Elétrico By Bruno José Marques Pinto
  28. Review of National Competition Policy Reforms By Productivity Commission

  1. By: Klaus Abbink; Jordi Brandts
    Abstract: We study collusive behaviour in experimental duopolies that compete in prices under dynamic demand conditions. In one treatment the demand grows at a constant rate. In the other treatment the demand declines at another constant rate. The rates are chosen so that the evolution of the demand in one case is just the reverse in time than the one for the other case. We use a box-design demand function so that there are no issues of finding and co-ordinating on the collusive price. Contrary to game-theoretic reasoning, our results show that collusion is significantly larger when the demand shrinks than when it grows. We conjecture that the prospect of rapidly declining profit opportunities exerts a disciplining effect on firms that facilitates collusion and discourages deviation.
    Keywords: Laboratory experiments, industrial organisation, oligopoly, price competition, collusion
    JEL: C90 C72 D43 D83 L13
    Date: 2005–02–01
  2. By: Gaspar, José-Miguel; Massa, Massimo
    Abstract: This Paper investigates the link between a firm’s competitive environment and the idiosyncratic volatility of its stock returns. We find that firms enjoying high market power, or established in concentrated industries, have lower idiosyncratic volatility. We posit that competition affects volatility in two distinct and inter-related ways. Market power works as a hedging instrument that smoothes out idiosyncratic fluctuations. At the same time, a high degree of market power implies lower information uncertainty for investors and therefore lower return volatility. We find strong support for both effects. Our results contribute to the understanding of recent trends of idiosyncratic volatility, and confirm the important link between stock market performance and the competitive environment of firms.
    Keywords: competition; idiosyncratic volatility; market powers; uncertainty
    JEL: G10 G12 L11
    Date: 2004–12
  3. By: DeYoung, Robert; Örs, Evren
    Abstract: We derive five hypotheses regarding market competition, price, and advertising from a theoretical model of a profit maximizing depository institution, and test these conjectures in a simultaneous system of deposit interest rates and advertising expenditures for a data panel of 1,867 thrift institutions that offer 13 different deposit products in 666 local markets in the US between 1994 and 2000. We find some support for each of our hypotheses – branding, information, Dorfman-Steiner, structure-advertising, and structure-price – with the strength of the results often depending on the attributes of the deposit products or the characteristics of the thrifts.
    Keywords: advertising; depository institutions; structure-performance
    JEL: G21 L10
    Date: 2004–12
  4. By: Banal - Estanol, Albert; Ottaviani, Marco
    Abstract: This Paper studies the private incentives and the social effects of horizontal mergers among risk-averse firms. In our model, merging firms are allowed to choose how to split their joint profits, with implications for risk sharing and strategic behaviour in the product market. If firms compete in quantities, consolidation makes firms more aggressive due to improved risk sharing. Mergers involving few firms are then profitable with a relatively small level of risk aversion. With strong enough risk aversion, mergers result in lower prices and higher social welfare. If firms instead compete in prices, consumers do not benefit from mergers with demand uncertainty, but can easily benefit in markets with cost uncertainty.
    Keywords: market imperfection; mergers and acquisitions; monopolization and horizontal anticompetitive practices; oligopoly
    JEL: D43 G34 L41
    Date: 2005–01
  5. By: Spagnolo, Giancarlo
    Abstract: Leniency programmes (or policies) reduce sanctions against cartel members that self-report to the Antitrust Authority. We focus on their ability to directly deter cartels and analogous criminal organizations by undermining internal trust, increasing individual incentives to ‘cheat’ on partners. Optimally designed ‘courageous’ leniency programmes reward the first party that reports sufficient information with the fines paid by all other parties, and with finitely high fines achieve the first best. ‘Moderate’ leniency programmes that only reduce or cancel sanctions, as implemented in reality, may also destabilize and deter cartels by (a) protecting agents that defect (and report) from fines; (b) protecting them from other agents’ punishment; and (c) increasing the riskiness of taking part to a cartel.
    Keywords: amnesty; antitrust; cartels; collusion; competition policy; corruption; immunity; law enforcement; leniency; oligopoly; organized crime; repeated games; risky cooperation; whistleblowers
    JEL: L13 L44
    Date: 2004–12
  6. By: Norbäck, Pehr-Johan; Persson, Lars
    Abstract: This Paper examines the restructuring of state assets in markets deregulated by privatizations and investment liberalizations. We show that a net revenue maximizing government has a stronger incentive to restructure than a profit maximizing acquiring firm: A restructuring firm only takes into account how much its own profit will increase. The government internalizes that restructuring increases the sales price not only due to the increase in the acquirer's profit, but also due to a reduced profit for the non-acquirer, whose profits decrease due to its rival's restructuring. We also identify situations where a slow sale can significantly reduce the sales price because of strategic investment and product market effects.
    Keywords: asset ownership; oligopoly; privatization; restructuring
    JEL: D44 L13 L33 L40 P31
    Date: 2005–01
  7. By: Fumagalli, Chiara; Motta, Massimo; Persson, Lars
    Abstract: We extend the literature on exclusive dealing by allowing the incumbent and the potential entrant to merge. This uncovers new effects. First, exclusive deals can be used to improve the incumbent’s bargaining position in the merger negotiation. Second, the incumbent finds it easier to elicit the buyer’s acceptance than in the case where entry can occur only by installing new capacity. Third, exclusive dealing reduces welfare because (i) it may trigger entry through merger whereas de novo entry would be socially optimal, and (ii) it may deter entry altogether. Finally, we show that when exclusive deals include a commitment on future prices they will increase welfare.
    Keywords: antitrust; entry deterrence; exclusive dealing; mergers
    JEL: K21 L10 L40
    Date: 2005–02
  8. By: Sembenelli, Alessandro; Siotis, Georges
    Abstract: A short review of the theoretical and empirical evidence indicates that foreign direct investment (FDI) has the potential to increase the intensity of competition as well as to act as a channel for technology transfers. One would expect, all else equal, an increase in average firm performance following a wave of FDI, as multinational corporations (MNCs) enjoy higher levels of efficiency and have the potential to generate positive spillovers. At the same time, the entry of foreign firms has also been associated with an increase in competitive pressure on the domestic market. Using a large firm level dataset covering all sectors of Spanish manufacturing during the period 1983-96, we disentangle these three effects by estimating a dynamic model of firm level performance, which we proxy by profitability. We find that FDI has a positive long-run effect on the profitability of target firms, but this is limited to firms belonging to R&D intensive sectors. In addition, the results indicate that foreign presence dampens margins. However, this effect appears to be more than compensated by positive spillovers in the case of knowledge intensive industries.
    Keywords: competition; efficiency; foreign direct investment; GMM; panel data; technology transfer
    JEL: F23 L40 L60
    Date: 2005–02
  9. By: Hawdon, David; Hunt, Lester; Levine, Paul L; Rickman, Neil
    Abstract: This paper examines optimal price (i.e. ‘sliding scale’) regulation of a monopoly when efficiency and managerial effort are not observed. We show how to operationalize this model of incentive regulation and use actual data from electricity distribution in England and Wales to make welfare comparisons of sliding scale regulation with a price cap regime and the First-Best (the full information case). Our method enables us to quantify technical uncertainty as faced by the electricity regulator in the 1990s and shows that there are significant welfare gains from a sliding scale relative to the price cap regime.
    Keywords: electricity distribution; regulation; sliding scale
    JEL: L51
    Date: 2005–02
  10. By: Panetta, Fabio; Schivardi, Fabiano; Shum, Matthew
    Abstract: We examine the informational effects of M&As by investigating whether bank mergers improve banks’ ability to screen borrowers. By exploiting a dataset in which we observe a measure of a borrower’s default risk that the lenders observe only imperfectly, we find evidence of these informational improvements. Mergers lead to a closer correspondence between interest rates and individual default risk: after a merger, risky borrowers experience an increase in the interest rate, while non-risky borrowers enjoy lower interest rates. These informational benefits appear to derive from improvements in information processing resulting from the merger, rather than from explicit information sharing on individual customers among the merging parties. Our evidence suggests that part of these informational improvements stem from the consolidated banks using ‘hard’ information more intensively.
    Keywords: asymmetric information; banking; mergers
    JEL: G21 L15
    Date: 2005–03
  11. By: Gagnepain, Philippe; Pereira, Pedro
    Abstract: We study the effect of entry on costs and competition in the Portuguese mobile telephony industry. We construct and estimate a model that includes demand, network, and cost equations. The latter accounts for inefficiency and cost reducing effort. We show that failure to account for cost reducing effort leads to biased estimates of competition in the industry. We also find that our estimated price-cost margins are similar to hypothetical Nash margins, if firms are patient, and have optimistic beliefs about the industry growth. Finally, our results suggest that the entry of a third operator in 1998 led to significant cost reductions, and fostered competition.
    Keywords: competition; efficiency; empirical analysis; entry; mobile telephony
    JEL: L13 L43 L93
    Date: 2005–04
  12. By: Gehrig, Thomas; Stenbacka, Rune
    Abstract: We explore the effects of switching costs on the subgame perfect quality decisions of oligopolists with repeated price competition. We establish a strong strategic quality premium. We show that competition for the establishment of customer relationships will eliminate low-quality firms in period 1 and that low-quality firms can survive only based on poaching profits. The equilibrium configuration is characterized by an agglomeration of two providers of top-quality as soon as switching cost heterogeneity is sufficiently significant. We demonstrate a finiteness property, according to which the two top-quality firms dominate the market with a joint market share exceeding 50%.
    Keywords: natural oligopoly; poaching; quality choice; switching costs
    JEL: D43 L15
    Date: 2005–04
  13. By: Ivaldi, Marc; McCullough, Gerard
    Abstract: Since the publication by Williamson (1968) of his seminal paper on antitrust there has been a growing recognition by regulators of the need to assess trade-offs between merger-related efficiency gains and merger-induced increases in market power. This paper addresses that need by presenting a structural econometric model of recent mergers in the US rail industry. The paper extends the structural methodology by evaluating actual (as opposed to simulated) merger effects and by incorporating parametric estimates of merger efficiencies. Our empirical finding is that consumer surplus in US rail freight markets increased by about 30% between 1986 and 2001 despite dramatic industry consolidation, suggesting that to date the Williamson trade-off has favoured rail customers. We find that behaviour in these markets is consistent with the Kreps-Scheinkman (1983) model of a two-stage game where capacities are chosen first and then prices are set to give the Cournot outcome.
    Keywords: differentiated product markets; logit models; merger analysis; railroads
    JEL: L11 L13 L41 L92
    Date: 2005–04
  14. By: Bose, Subir; Orosel, Gerhard O; Ottaviani, Marco; Vesterlund, Lise
    Abstract: This paper studies dynamic pricing by a monopolist selling to buyers who learn from each other’s purchases. The price posted in each period serves to extract rent from the current buyer, as well as to control the amount of information transmitted to future buyers. As information increases future rent extraction, the monopolist has an incentive to subsidize learning by charging a price that results in information revelation. Nonetheless in the long run, the monopolist generally induces herding by either selling to all buyers or exiting the market.
    Keywords: herd behaviour; informational cascade; monopoly; public information; social learning
    JEL: D83 L12 L15
    Date: 2005–04
  15. By: Ivaldi, Marc; Vibes, Catherine
    Abstract: The objective of the paper is to elaborate a simulation model to analyse inter and intra-modal competition in the transport industry, based on game theory models. In our setting, consumers choose a transport mode and an operator to travel on a given city-pair; operators strategically decide on prices for the types of service they provide. We derive the market equilibrium and simulate potential scenarios. In particular we measure the impact of entry by a low cost train operator and the effect of a kerosene tax. Hence our framework could serve as a tool to measure the effectiveness of competition on a relevant market or to design marketing strategies. More generally it can be applied in cases of oligopolistic competition when detailed data are not available.
    Keywords: product differentiation; relevant transport market; simulation model
    JEL: C35 C81 L11 L13 L92 L93 L98
    Date: 2005–04
  16. By: Lindqvist, Tobias; Stennek, Johan
    Abstract: This paper tests the insiders’ dilemma hypothesis in a laboratory experiment. The insiders’ dilemma means that a profitable merger does not occur, because it is even more profitable for each firm to unilaterally stand as an outsider (Stigler, 1950; Kamien and Zang, 1990 and 1993). The experimental data provides support for the insiders’ dilemma, and thereby for endogenous rather than exogenous merger theory. More surprisingly, our data suggests that fairness (or relative performance) considerations also make profitable mergers difficult. Mergers that should occur in equilibrium do not, since they require an unequal split of surplus.
    Keywords: antitrust; coalition formation; experiment; insiders' dilemma; mergers
    JEL: C78 C92 G34 L13 L41
    Date: 2005–04
  17. By: Hoernig, Steffen
    Abstract: This paper analyses the effects of universal service obligations, such as uniform pricing, coverage constraints and price caps, on markets newly opened to competition, e.g. broadband services. We show that the requirement of uniform pricing has strong repercussions on coverage decisions. Imposed on the incumbent only, it may distort his coverage decision downward to avoid duopoly entry. If also imposed on entrants it increases the likelihood that entry leads to independent monopolies rather than competition. A large enough coverage constraint on the incumbent re-establishes incentives for duopoly entry, but may lead to higher prices.
    Keywords: coverage constraints; entry; price caps; uniform pricing; universal service obligations
    JEL: L43 L51 L52
    Date: 2005–05
  18. By: Belderbos, Rene; Lykogianni, Elissavet; Veugelers, Reinhilde
    Abstract: We analyse strategic interaction in R&D internationalization decisions by two multinational firms competing both abroad and in their home markets and examine different incentives for foreign R&D faced by technology leaders and technology laggards. The model takes into account the impact of local inter-firm R&D spillovers, (non-costless) international intra-firm transfer of knowledge, and the notion that internal R&D increases the effectiveness of incoming spillovers. Greater efficiency of intra-firm transfers and greater spillovers increases the attractiveness of home R&D to the technology leader. The lagging firm in contrast increases the share of foreign R&D as overseas technology sourcing becomes more effective. Greater product market competition encourages the leading firm to engage in foreign R&D to capture a larger share of profits on the foreign market, while laggards concentrate more R&D at home to defend their home market position. The country with a stricter intellectual property rights regime attracts a larger share of R&D by both leader and laggard.
    Keywords: MNEs; R&D; R&D spillovers
    JEL: D21 F23 L16
    Date: 2005–05
  19. By: Degryse, Hans; Masschelein, Nancy; Mitchell, Janet
    Abstract: This paper studies the impact of bank mergers on firm-bank lending relationships using information from individual loan contracts in Belgium. We analyse the effects of bank mergers on the probability of borrowers maintaining their lending relationships and on their ability to continue tapping bank credit. The Belgian financial environment reflects a number of interesting features: high banking sector concentration; ‘in-market’ mergers with large target banks; importance of large banks in providing external finance to SMEs; and low numbers of bank lending relationships maintained by SMEs. We find that bank mergers generate short-term and longer-term effects on borrowers' probability of losing a lending relationship and on credit availability. Mergers also have heterogeneous impacts across borrower types, including borrowers of acquiring and target banks, borrowers of differing size, borrowers with single versus multiple relationships, and borrowers with differing relationship intensities. Firms borrowing from acquiring banks are less likely to lose their lending relationship, while target bank borrowers are more likely to lose their relationship or see their credit availability harmed. Overlap borrowers – borrowing from two of the merging banks – are less likely to lose their relationship than firms borrowing from only one of the merging banks or firms borrowing from non-merging banks.
    Keywords: bank lending relationships; bank mergers; SME loans
    JEL: G21 G32
    Date: 2005–05
  20. By: Gagnepain, Philippe; Marín Uribe, Pedro L
    Abstract: We consider an empirical model of worldwide airlines’ alliances that we apply to a large set of companies for the period 1995-2000, with special attention to US and EU carriers. From the estimation of a cost, capacity and demand system that accounts for cross-price elasticities, we attempt to shed light on several interesting issues: First, we analyse whether alliance members’ networks are complements or substitutes. Second, we construct price-cost margins and test several hypothesis of non-cooperative behaviour such as individual Nash and joint price setting within the alliance. We suggest that current alliances' pricing habits are not uniform and range from individual Nash to more competitive behaviours.
    Keywords: airline; alliances; cross-price elasticities; Nash behaviour
    JEL: L11 L13 L41 L93
    Date: 2005–05
  21. By: Mark Carlson; Kris James Mitchener
    Abstract: It is often argued that branching stabilizes banking systems by facilitating diversification of bank portfolios; however, previous empirical research on the Great Depression offers mixed support for this view. Analyses using state-level data find that states allowing branch banking had lower failure rates, while those examining individual banks find that branch banks were more likely to fail. We argue that an alternative hypothesis can reconcile these seemingly disparate findings. Using data on national banks from the 1920s and 1930s, we show that branch banking increases competition and forces weak banks to exit the banking system. This consolidation strengthens the system as a whole without necessarily strengthening the branch banks themselves. Our empirical results suggest that the effects that branching had on competition were quantitatively more important than geographical diversification for bank stability in the 1920s and 1930s.
    Keywords: Branch banks ; Competition
    Date: 2005
  22. By: Chakravarty Sujoy
    Abstract: Using data from the International Telecommunications Union (ITU) Database I explore the market for the provision of cellular services in Asia. This study looks at the diffusion of mobile technologies and mobile tariffs over the last decade. It compares the degree of competition, regulation and its effects in Asia with mobile markets in developed countries. It also analyses a 29 country 10 year panel data set in order to study the determinants of mobile penetration in Asia. The results indicate that competition has played a major role in increasing the diffusion of cell phones. The presence of an independent telecommunication regulator as well as increasing capacity of fixed line telephone exchanges has also positively affected the diffusion of mobile services. The last part of the study takes a brief look at the cellular market in India, where mobile service provision has seen startling growth in the last decade. This growth has made for falling tariffs, increase in the number of firms and technologies and a large subscriber base which is still growing at a significant rate. The structure of competition is explored in some detail for regional markets using monthly data from 1997 to 2004.
    Keywords: Competition, Cellular, Regulation, Telecommunication.
    JEL: D4
    Date: 2005–06–07
  23. By: Dennis W. Carlton; Michael Waldman
    Abstract: This paper investigates the role of product upgrades and consumer switching costs in the tying of complementary products. Previous analyses of tying have found that a monopolist of one product cannot increase its profits and reduce social welfare by tying and monopolizing a complementary product if the initial monopolized product is essential, where essential means that all uses of the complementary good require the initial monopolized product. We show that this is not true in durable-goods settings characterized by product upgrades, where we show tying is especially important when consumer switching costs are present. In addition to our results concerning tying our analysis also provides a new rationale for leasing in durable-goods markets. We also discuss various extensions including the role of the reversibility of tying as well as the antitrust implications of our analysis.
    JEL: L0 L1 L4
    Date: 2005–06
  24. By: Norman, Peter; Fang, Hanming
    Abstract: Comparing monopoly bundling with separate sales is relatively straightforward in an environment with a large number of goods. In this paper we show that results that are similar to the asymptotic results can be obtained in the more realistic case with a given finite number of goods provided that the distributions of valuations are symmetric and log-concave.
    JEL: L11 L12
    Date: 2005–06–10
  25. By: Evens SALIES (GRJM)
    Abstract: The opening of the residential UK electricity sector in 1999 motivated several studies of its impact on both the level and structure of retail charges, and on incumbents’ market power. Using regional observations on tariffs offered in January 2004, the present paper supports previous results about the responses of simulated retail charges from actual tariffs to distribution and transmission costs, customers density, the length of low voltage underground circuit, and show new. We investigate whether vertically integrated suppliers have a particular effect on charges ceteris paribus the effect of cost drivers and other suppliers’ specific factors.
    Keywords: Pricing structure, Industrial Organization, Electricity Retail
    JEL: C1 C2 C3 C4 C5 C8
    Date: 2005–06–02
  26. By: Mahesh Kumar Tambi (IIMT, Hyderabad India)
    Abstract: This paper is an attempt to evaluate the impact of Mergers on the performance of the companies. Theoretically it is assumed that Mergers improves the performance of the company due to increased market power, Synergy impact and various other qualitative and quantitative factors. Although the various studies done in the past showed totally opposite results. These studies were done mostly in the US and other European countries. I evaluate the impact of Mergers on Indian companies through a database of 40 Companies selected from CMIE’s PROWESS, using paired t- test for mean difference for four parameters; Total performance improvement, Economies of scale, Operating Synergy and Financial Synergy. My study shows that Indian companies are no different than the companies in other part of the world and mergers were failed to contribute positively in the performance improvement.
    Keywords: Mergers, Amalgamation, Acquisition, Horizontal Mergers, Vertical Mergers, Backward Integration, Foreword Integration, Circular Mergers, Conglomerate Mergers, Congeneric Mergers,
    JEL: G
    Date: 2005–06–08
  27. By: Bruno José Marques Pinto (Graduate School of Economics at Fundacao Getulio Vargas - EPGE/FGV)
    Abstract: The paper examines the economic and regulatory factors that led to an explosion in the wholesale power prices, supply shortages, and utility insolvencies in California’s electricity sector. A necessary first step in determining the lessons learned from the California electricity crisis is a diagnosis of its causes. This requires a clear understanding of the federal and state regulatory infrastructure that governs the US electricity supply industry. The structure of California’s restructured electricity sector and its performance are discussed. The effects on wholesale market prices are analyzed. The regulatory responses leading to utility credit problems and supply shortages are also discussed. The paper concludes with a set of lessons from the California electricity crisis.
    Keywords: Electricity, eletricidade, regulation, regulação, California, deregulation
    JEL: L9 L5 L1
    Date: 2005–06–07
  28. By: Productivity Commission
    Abstract: In 2004, the Australian Government asked the Productivity Commission to look at the impact on the economy and the community of NCP and related reforms and for areas which offer opportunities for significant gains. The Commission found that the benefits of NCP have greatly outweighed the costs. The benefits have flowed to both low and high income earners, and to country as well as city Australia. The Commission outlines how Australia’s ageing population and other international and domestic pressures necessitate further actions to raise productivity and sustainability. The Commission proposes a wide-ranging agenda for nationally coordinated reform, particularly in the areas of energy and water, freight transport, greenhouse gas abatement and consumer protection. An overarching review of the health system and further reform in vocational education and training are also needed.
    Keywords: National Competition Policy, NCP, Reforms, Infrastructure, Health, Transport, Education
    JEL: H I J P Q R
    Date: 2005–06–06

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