خروجی و اثرات قیمتی ارتقاء خدمات بخش رقابت در اقتصاد های بزرگ باز
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|25410||2006||19 صفحه PDF||سفارش دهید||محاسبه نشده|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : European Economic Review, Volume 50, Issue 5, July 2006, Pages 1131–1149
This paper studies the output and price effects of exogenous changes in the degree of competition. It is motivated by initiatives to enhance competition in services in the European Union. The paper shows that a higher degree of competition in the nontradable goods sector may have adverse implications for international price competitiveness. It highlights four channels through which enhanced competition in the non-tradable goods sector affects output and the general price level in a large, open economy (lower monopoly rents, higher wages, lower import prices, international wealth transfer) and assesses their relative importance. The conclusions suggest that the Single Market enhances output and reduces the general price level.
Regulatory reforms that succeed in increasing competition in previously sheltered industries may have significant economic benefits. The benefits of intensified competition are perhaps obvious: competition is supposed to lead to a more efficient allocation of resources and lower monopoly rents. But what are the pitfalls? Generally speaking, market regulation involves a government effort to reduce certain types of market failure (e.g. barriers to entry, asymmetric information, external effects, incomplete contracts), taking into account the presence of government failure (a lack of market incentives, accountability problems, bureaucracy, information problems, hold-up problems, distortionary taxation). The range of interesting micro-economic issues involved may explain that studies in regulatory reform often focus on the design of mechanisms and institutions, taking for granted that the benefits of regulatory reform for the targeted sector will directly translate to the macro level, rather than taking into account that there may be implications for other sectors and possibly even for other countries. Enhancing competition is particularly relevant in continental Europe, where government intervention is traditionally more pronounced than in Anglo-Saxon countries and where the introduction of the euro has eliminated a channel of adjustment, implying that adjustment via market flexibility now has a more important role to play.1 The degree of competition is especially low in services markets, which tend to be shielded from international competition. Therefore, these markets are priority fields of action for the competition authorities. Initiatives by the European Commission promote the completion of a truly Single Market where monopolies, price agreements between suppliers and preferential treatment of domestic suppliers by governments are forbidden by law. Moreover, EU member states are – albeit sometimes hesitantly – liberalising their network industries (telecom, energy, railways, water) and upgrading anti-trust legislation and enforcement. This paper studies the effects of increasing the degree of competition in the services sector. Competition policy is likely to affect output and prices in the sector targeted by the competition authorities, but it may have effects on other sectors as well. Lower prices for the goods produced by the targeted sector may affect the real income of households and may give rise to a shift in demand between products of different industries which, in turn, may affect the demand for and supply of labour. Once we acknowledge that deregulating the shielded sector may have implications for the open sector, it becomes clear that in case of a large economy, such as the European Union, there may also be spillovers to other countries. Thus, third countries may benefit from, or be hurt by regulatory reform in Europe. Understanding the macroeconomic consequences of microeconomic reform is of interest to fiscal and monetary policymakers alike. An improved ability to gauge the impact of deregulation on output and prices will help policymakers to assess the underlying development of these variables. For fiscal policymakers, a better assessment of the underlying trends in output, for example, would help to improve estimates of the underlying government budget balance, making it possible to detect a fiscal deterioration at an earlier stage. For monetary policymakers, it is particularly relevant to know how product market liberalisation affects the general price level. Given the lags involved in the monetary transmission process, policy needs to be based on an assessment of where the economy is heading. This assessment can be improved if central bankers better understand the macroeconomic impact of policy measures taken by others, such as deregulation. See, for instance, European Central Bank (2001). To address the issues above, I build on the framework by Obstfeld and Rogoff, 1995 and Obstfeld and Rogoff, 1996. Their model allows for imperfect competition, short-run nominal rigidities and rich exchange rate dynamics. Obstfeld and Rogoff's basic model is a two-country model with monopolistic competition and a single differentiated tradable good. The current paper distinguishes between tradable and non-tradable goods. It allows for imperfect competition in both the tradable and the non-tradable goods sector. It takes into account the fact that the degree of competition in non-tradables (services) markets tends to be lower than the degree of competition in tradable (goods) markets. This is an extension of the literature. This extended model is used to study the impact of an increase in the degree of competition in the non-tradables sector. As in Blanchard and Giavazzi (2003), the elasticity of substitution between products is interpreted as an instrument of competition policy. Whereas they focus on the distribution of rents between workers and firms in a one-sector, closed economy, this paper concentrates on the output and price effects in a two-sector, open economy. This framework makes it possible to take into account that deregulating the non-tradables sector may have an impact on the tradables sector and on third countries. Moreover, contrary to Blanchard and Giavazzi, the current paper allows for nominal rigidities. It turns out that nominal rigidities enhance the impact of deregulation on consumption and prices, in the short run as well as in the long run. Also, deregulation in the presence of nominal rigidities gives rise to an international wealth transfer, which plays a role in the transmission of the macroeconomic effects of deregulation to third countries. I obtain the following results. First, the model suggests that an increase in the degree of competition in the non-tradable goods sector will have adverse long-run implications for international competitiveness. Intuitively, more competition in the non-tradables sector triggers an increase in labour demand in the non-tradables sector, which causes a bidding up of wages and draws labour from the tradable goods sector, leading to lower tradables output and a higher price for tradables in the new equilibrium. The implication is that deregulating the domestic services sector, via its impact on wages, will ultimately make a country less competitive internationally. Despite the adverse effects for the tradables sector, the welfare effects of deregulation for the home country are positive for all plausible parameter values. Second, I highlight the existence of four channels through which an increase in the degree of competition in the non-tradables sector affects output and prices. Take, for example, the impact on the general price level. Most important is the direct effect via downward pressure on profits margins. For a large country, enhancing competition in the non-tradables sector also affects the general price level via an improvement in the terms of trade and via an increase in the demand for real money balances (more competition leads to a short-run accumulation of net foreign assets. The international wealth transfer enables households to increase consumption, which means that real money balances have to increase). These two effects re-inforce the downward impact on the general price level caused by the decline in profit margins. The fourth channel works in the other direction: the expansion of output in the non-tradables sector leads firms to bid up the wage rate, which increases labour costs and has an upward impact on the general price level. I show that, for all realistic parameter values, an increase in the degree of competition in the non-tradables sector increases output and reduces the general price level in the domestic economy. The remainder of this paper is organised as follows. In the next section, an outline of the model and its solution are presented. Section 3 analyses the consequences of a permanent exogenous increase in the degree of competition. Section 4 concludes.
نتیجه گیری انگلیسی
This paper analyses the output and price effects of deregulation in the European non-tradables sector in a dynamic framework. Recent initiatives, both at the European level and in individual EU member states, promote a higher degree of competition. The degree of competition in many non-tradables (services) markets is substantially less than in tradable (goods) markets. Therefore, the non-tradables markets are priority fields of action for the competition authorities. The model in this paper suggests that product market deregulation in one sector has adverse spillovers to other sectors. Enhancing competition in the non-tradables sector triggers an increase in labour demand, which causes a bidding up of real wages, leading to a higher price for tradables in the new equilibrium. The implication is that deregulating the domestic services sector, via its impact on wages, ultimately makes a country less competitive internationally. This adverse effect of deregulation does not overturn the common wisdom that deregulation is welfare-enhancing for the country itself, but it indicates that deregulation may not only make firms in the targeted sector worse off (by reducing their monopoly profits), but may also run against the interests of firms in other sectors (by making labour more expensive). Under realistic assumptions, an increase in the degree of competition in the non-tradables sector increases output and lowers the general price level in the domestic economy. I have highlighted four channels through which competition policy affects output and the general price level: (1) a decline in profit margins, (2) an improvement in the terms of trade, (3) an international wealth transfer, and (4) an increase in wages. Whereas the first three channels contribute to higher output and lower prices, the fourth channel works in the other direction. Algebraically, the fourth channel reduces the direct impact of lower profit margins (the first channel) by roughly one-half. Numerically, the second and third channels are relatively small for most plausible parameter values. The model may be used by fiscal and monetary policymakers to distinguish the output and price impact of enhanced competition from other factors which influence output and the general price level. The results are robust to allowing for wage flexibility and for different values of the elasticity of labour supply (which is implicitly assumed to be unity in most of the paper). Nominal wage rigidities enhance the long-run effects of deregulation by giving rise to an international wealth transfer and by re-inforcing the long-run improvement in the terms of trade of the deregulating country. However, as seen, the relative size of these two channels is relatively small. A more important conclusion that follows from the analysis is that product market deregulation has larger real effects if labour markets are flexible (in the sense that labour supply is more responsive to the real wage). The reason is that labour market flexibility reduces the adverse impact of deregulation on the open sector via the wage channel, which appears to be relatively important. Conversely, if labour markets are less flexible, as may be the case in Europe, deregulation of the shielded sector may have a relatively large adverse impact on the open sector.