Competition policy

Giacomo Calzolari, Vincenzo Denicolò, 20 January 2016

Intel dominates the market for microchips, an essential component of innumerable electronic devices. This column proposes a structured antitrust test that could tackle the issue of how antitrust authorities make decisions on whether a dominant firm’s rivals can compete for exclusive contracts effectively. This decision depends on the size of the dominant firm’s competitive advantage, which isn’t something that we can easily measure but is something that is correlated with other variables, such as the firms’ market shares.

Jörg Decressin, Prakash Loungani, 02 December 2015

Internal devaluations have been suggested as a possible policy option for countries in a currency union facing large external deficits. These policy actions seek to restore competitiveness by replicating the outcomes of an external devaluation. This column examines wage moderation as a potential means of internal devaluation for EZ countries. If pursued by several countries, wage moderation can work if monetary policy is not constrained by the zero lower bound, or if supported by quantitative easing. Without sufficient monetary accommodation, it will not deliver much of a boost to output, and may hurt overall EZ output.

Jamal Ibrahim Haidar, Takeo Hoshi, 21 October 2015

The Abe administration has outlined a desire for Japan to rank among the top three OECD countries in the World Bank’s Doing Business ranking. This column uses the Doing Business ranking itself to identify potential reforms the country could pursue to improve its position. Several politically viable, non-judicial reforms could quickly and easily move Japan up in the ranking. The approach highlights how the Doing Business rankings can be used to inform policy reform discussions.

Thorsten Beck, Haki Pamuk, Ravindra Ramrattan, Burak Uras, 12 September 2015

The focus of the financial inclusion debate has been mainly on credit and savings services. This column provides evidence that more effective payment systems can help ease small businesses’ access to external finance, ultimately resulting in faster economic growth. The success story of M-PESA in Kenya shows that mobile money technology not only increases financial inclusion of households, but also alleviates small firms’ financing constraints.

Shuhei Nishitateno, 10 September 2015

Whether incumbent firms deter new entrants in a more concentrated market has been of major concern to antitrust authorities. This column introduces empirical evidence on the relationship between market concentration and entry in the intermediate goods market, using unique data from the Japanese auto market. The findings show a U-shaped relationship, whereby entry decreases and then increases as the market concentrates.

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