The Economic Effect Of Competition Law Enforcement: The Case Of The Netherlands |
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Authors: | Jarig van Sinderen Ron Kemp |
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Institution: | (1) Netherlands Competition Authority, P.O. Box 16326, 2500 BH The Hague, TheNetherlands |
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Abstract: | Summary In this paper we try to bridge the gap between the outcome ambitions of competition policy in terms of welfare gains and consumer
surplus and the longer term effects of competition policy on growth and employment. First of all, an overview is given of
the different definitions of welfare. We explain why maximising the consumer surplus is an important part of the mission statement
for most competition authorities. In the second part of the paper we estimate the impact of the introduction of the competition
law on economic development. The effects of antitrust policies, merger control and energy regulation on the consumer surplus
appear substantial. This increase in consumer surplus can be interpreted as a cut in the “market power wedge” which, from
a modelling point of view, is comparable to a cut in the tax wedge. A model simulation for the Netherlands shows that the
economy responded positively to this increase in the consumer surplus. We find that production has grown by an extra 0.5%
and that employment has increased by 0.4% as a result of the enforcement of the Competition Law.
The authors are respectively Chief Economist of the NMa and senior advisor at the Office of the Chief Economist of the NMa.
This paper is the background paper for the presentation with the same title at the conference “Measuring the Economic Effects
of Competition Law Enforcement”, held in The Hague, 17 and 18 October 2007. The authors would like to thank two anonymous
reviewers for their valuable comments and suggestions. |
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Keywords: | Competition law Antitrust enforcement Mergers Macro-economic effects |
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