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on Regulation |
| By: | DAVID BACH (Instituto de Empresa) |
| Abstract: | Technical standards and product regulations increasingly shape international trade patterns, the organization of cross-national production, and global investment flows. This paper examines the evolution of international market regulation in the pharmaceutical- and cosmetics industries over the past three decades. International market regulation of pharmaceuticals and cosmetics poses an intriguing empirical puzzle. Both industries have seen the emergence and subsequent institutionalization of international market regulation over the last three decades. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:emp:wpaper:wp08-17&r=reg |
| By: | Berkman, Henk; Cole, Rebel; Fu, Lawrence |
| Abstract: | We examine the wealth effects of three regulatory changes designed to improve minorityshareholder protection in the Chinese stock markets. Using the value of a firm’s related-party transactions as an inverse proxy for the quality of corporate governance, we find that firms with weaker governance experienced significantly larger abnormal returns around announcements of the new regulations than did firms with stronger governance. This evidence indicates that securities-market regulation can be effective in protecting minority shareholders from expropriation in a country with weak judicial enforcement. We also find that firms with strong ties to the government did not benefit from the new regulations, suggesting that minority shareholders did not expect regulators to enforce the new rules on firms where block holders have strong political connections. |
| Keywords: | China; convergence; enforcement; expropriation; political connections; investor protection; minority shareholder; regulation; tunneling |
| JEL: | G38 G34 G32 |
| Date: | 2008–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8087&r=reg |
| By: | Rod Tyers; Lucy Rees |
| Abstract: | The retreat from public ownership of service firms and industries has left behind numerous private monopolies and oligopolies supervised by regulatory agencies. Services industries in government and private ownership generate two-thirds of Australia’s value added and employ three quarters of its workforce. This study offers an economy-wide approach that represents monopoly and oligopoly behaviour explicitly. It examines the implications of oligopoly rents for factor markets and the real exchange rate, the extent of sectoral interactions and the potential economy wide gains from tighter price cap regulation, with the results confirming the merit of an economy-wide approach. External shocks, like the present “China boom”, are also simulated. Such positive shocks are shown to expand the potential for oligopoly rents and therefore to raise the bar for regulatory agencies. Moreover, less than tight price caps are shown to exacerbate entry-exit hysteresis in boom and bust cycles. |
| JEL: | C68 D43 D58 L13 L43 L51 L80 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:acb:camaaa:2008-05&r=reg |
| By: | Paul Conway; Richard Herd; Thomas Chalaux |
| Abstract: | This paper uses the OECD's indicators of product market regulation to assess the extent to which the regulatory environment affects economic performance across Indian states. The degree to which product market regulation is supportive of competition is found to vary considerably across states. Furthermore, regression results indicate that these differences in regulation have a significant impact on both labour and total factor productivity. States in which the regulatory environment restricts competition have lower productivity growth in comparison to states in which regulation is more supportive of competition. Relatively liberal states are also found to attract more foreign investment and have a larger share of employment in the organised sector in comparison to states with a more restrictive regulatory environment. State governments that have enacted a relatively liberal regulatory framework have also been more successful at infrastructure provision. Ongoing reform of product market regulation is necessary to improve productivity growth further and ensure that the benefits of reform are distributed more widely across the country. This working Paper relates to the 2007 Economic Survey of India (www.oecd.org/eco/surveys/india). <P>Réglementation des marchés de produits et performances économiques dans les États de l'Union indienne <BR>Nous utilisons dans ce document les indicateurs de réglementation des marchés de produits (RMP) de l'OCDE pour évaluer les répercussions de l'environnement réglementaire sur les performances économiques des États de l'Union indienne. Nous parvenons à la conclusion que la mesure dans laquelle la réglementation des marchés de produits favorise la concurrence varie considérablement suivant les États. En outre, les résultats obtenus par analyse de régression indiquent que ces différences de réglementation ont un impact sensible tant sur la productivité de la main-d'oeuvre que sur la productivité totale des facteurs. Les États où l'environnement réglementaire restreint la concurrence enregistrent des gains de productivité plus faibles que ceux dans lesquels la réglementation est plus propice au libre jeu des forces du marché. Nous montrons également que les États relativement libéraux attirent davantage l'investissement étranger, qu'ils ont de meilleures infrastructures, et que le secteur organisé y représente une proportion plus importante de l'emploi que dans les États ayant un cadre réglementaire plus restrictif. Les États qui ont décrété un système réglementaire relativement libéral sont aussi ceux qui ont connu le plus de réussite dans l'approvisionnement en infrastructure. Les autorités doivent aller plus loin dans la réforme de la réglementation des marchés de produits pour renforcer encore la croissance de la productivité, et veiller à ce que les fruits des réformes soient plus largement distribués dans l'ensemble du pays. Ce document de travail se rapporte à l'Étude économique de l'Inde 2007 (www.oecd.org/eco/etudes/inde). |
| Keywords: | productivity convergence, institutions and growth, convergence de la productivité, institutions et croissance |
| JEL: | K2 L5 O1 O4 |
| Date: | 2008–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:600-en&r=reg |
| By: | Paul Conway; Richard Herd |
| Abstract: | Competition in product markets has been found to be an important determinant of economic performance in developed and developing countries. This paper uses the OECD's indicators of product market regulation (PMR) to assess the extent to which India's regulatory environment is supportive of competition in markets for goods and services. The results indicate that although liberalisation has improved the regulatory environment to international best practices in a few areas, the overall stance of product market regulation is still relatively restrictive. The regulatory environment is also found to vary markedly across the 21 Indian states for which the PMR indicators are estimated. The paper goes on to review various aspects of product market regulation in India and suggest a number of policy initiatives that would improve the degree to which competitive market forces are able to operate. This working Paper relates to the 2007 Economic Survey of India (www.oecd.org/eco/surveys/india). <P>Améliorer la réglementation des marchés de produits en inde : comparaison internationale et situation dans les différents États <BR>On sait aujourd'hui que la concurrence sur les marchés de produits est un déterminant important de la performance économique des pays développés et en développement. Utilisant les indicateurs de réglementation des marchés de produits (RMP) mis au point par l'OCDE, la présente note examine dans quelle mesure les dispositions en vigueur en Inde permettent à la concurrence de s'exercer sur les marchés de biens et de services. Il ressort de cette analyse que, bien que l'environnement réglementaire ait été aligné sur les meilleures pratiques internationales dans quelques domaines grâce à des mesures de libéralisation, la réglementation des marchés de produits demeure relativement restrictive dans l'ensemble. Par ailleurs, la situation est très variable suivant les 21 États de la Fédération pour lesquels les indicateurs de RMP sont estimés. Après un examen de différents aspects de la réglementation des marchés de produits en Inde, un certain nombre d'initiatives sont proposées dans le but de faciliter le jeu des mécanismes concurrentiels du marché. Ce document de travail se rapporte à l'Étude économique de l'Inde 2007 (www.oecd.org/eco/etudes/inde). |
| Keywords: | product market regulation, competition, concurrence, indicators, indicateurs, réglementation des marchés de produits |
| JEL: | K2 L5 O1 |
| Date: | 2008–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:599-en&r=reg |
| By: | Bigoni, Maria (IMT-Lucca); Fridolfsson, Sven-Olof (IFN); Le Coq, Chloe (SITE); Spagnolo, Giancarlo (Tor Vergata university, SITE, and CEPR) |
| Abstract: | Leniency policies and rewards for whistleblowers are being introduced in ever more fields of law enforcement, though their deterrence effects are often hard to observe, and the likely effect of changes in the specific features of these schemes can only be observed experimentally. This paper reports results from an experiment designed to examine the effects of fines, leniency programs, and reward schemes for whistleblowers on firms' decision to form cartels (cartel deterrence) and on their price choices. Our subjects play a repeated Bertrand price game with differentiated goods and uncertain duration, and we run several treatments different in the probability of cartels being caught, the level of fine, the possibility of self-reporting (and not paying a fine), the existence of a reward for reporting. We find that fines following successful investigations but without leniency have a deterrence effect (reduce the number of cartels formed) but also a pro-collusive effect (increase collusive prices in surviving cartels). Leniency programs might not be more efficient than standard antitrust enforcement, since in our experiment they do deter a significantly higher fraction of cartels from forming, but they also induce even higher prices in those cartels that are not reported, pushing average market price significantly up relative to treatments without antitrust enforcement. With rewards for whistle blowing, instead, cartels are systematically reported, which completely disrupts subjects' ability to form cartels and sustain high prices, and almost complete deterrence is achieved. We also analyze post-conviction behavior, finding that there is a strong expost deterrence (desistance) effect. Moreover post-conviction prices are on average lower than before even though the average prices within cartels are the same. Finally, we find a strong cultural effect comparing treatments in Stockholm with those in Rome, suggesting that optimal law enforcement institutions differ with culture. |
| Keywords: | Anti-trust; Collusion; Experiment; Leniency |
| JEL: | K21 L13 L41 |
| Date: | 2008–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hastef:0698&r=reg |
| By: | Kari E.O. Alho |
| Abstract: | ABSTRACT : Russia prices its energy commodities domestically much lower than the prices prevailing in the international market. Using a general equilibrium framework, we analyse reasons for why Russia should or should not use such a price regulation. First, being a major exporter of energy commodities and having considerable monopolistic market power, the country is able to use its supply in order to influence the international energy prices. A rational way to channel this rent to the domestic non-energy sector and to domestic consumers is through a lower, i.e., competitive, domestic price on energy than that in the world market. Second, we introduce the classic infant-industry argument with positive intertemporal spillovers through learning-by-doing linked to current production. These spill-overs are likely to be relevant for manufacturing in a transition economy, which argument creates a further reason for a deviation in the pricing of energy to domestic industrial producers from the world market prices. However, an empirical consideration of these results and the estimation of the learning-by-doing curve suggest that the first effect can in principle be sizeable, while the second is only marginal and that, overall, Russia is currently subsidising its domestic energy prices clearly too much. Further, we conclude that the country should not subsidise its domestic consumers more than its domestic industry, as it does in reality. We also derive the optimal domestic energy tax and show that it is modest in comparison to its current rate. The optimal pricing policy could therefore have a marked positive effect on the international supply of energy by Russia. |
| Keywords: | energy, Russia, international and domestic prices |
| Date: | 2008–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1128&r=reg |
| By: | Elizabeth Anne Wilman |
| Abstract: | Emissions intensity caps, which have gained popularity for regulating greenhouse gas emissions, limit emissions as a proportion of output. The objective is to index allowed emissions to output, avoiding a higher than expected marginal abatement cost when output is expanding. In aggregate, it is possible to set an emissions intensity cap and translate it into an absolute cap for the purpose of emissions trading. However, individual intensity limits are also used, and are part of some emission trading programs. Without the restrictive assumption that output is unresponsive to changes in price or cost, it is not possible to set individual intensity limits that will achieve economic efficiency. This inefficiency also compromises the welfare gains achievable through true cost saving abatement options, such as cheap offsets. A hybrid price-quantity regulation can better promote economic efficiency, while preserving the political appeal of a permit system with gratis initial allocation. It can also avoid a high marginal abatement cost without conceding the gains achievable through cheaper abatement technologies. Nevertheless, individual intensity caps can be part of a piecemeal approach to economic efficiency. If conditionally efficient intensity caps are already in place, the transition to a hybrid system is relatively straightforward. |
| JEL: | Q52 Q58 D61 |
| Date: | 2008–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:clg:wpaper:2008-19&r=reg |
| By: | John Haltiwanger; Stefano Scarpetta; Helena Schweiger |
| Abstract: | This paper analyzes job flows in a sample of 16 industrial and emerging economies over the past decade, exploiting a harmonized firm-level dataset. It shows that industry and firm size effects (and especially firm size) account for a large fraction in the overall variability in job flows. However, large residual differences remain in the job flow patterns across countries. To account for the latter, the paper explores the role of differences in employment protection legislation across countries. Using a difference-in-difference approach that minimizes possible endogeneity and omitted variable problems, our findings show that hiring and firing costs tend to curb job flows, particularly in those industries and firm size classes that require more frequent labor adjustment. |
| JEL: | J23 J53 K31 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13920&r=reg |