Assessing Competition Policy Performance Metrics: Concerns about Cross-Country Generalisability

By Rodriguez, A. E.; Denardis, Lesley | Indian Journal of Economics and Business, June 2008 | Go to article overview

Assessing Competition Policy Performance Metrics: Concerns about Cross-Country Generalisability


Rodriguez, A. E., Denardis, Lesley, Indian Journal of Economics and Business


Abstract

Recent interest in competition policy performance has typically relied on subjective performance metrics that have undergone little direct scrutiny by users. We examine the quality of the popular World Economic Forum's antitrust performance metric and assess whether it is immune from perception-bias. A bias-free metric is required to ensure cross-country consistency in its intended performance assessment.

We note various instances where the WEF's competition policy performance survey was completed but where there existed neither competition legislation nor an associated enforcement agency at the time. This seeming inconsistency is neither amenable to traditional econometric heterogeneity treatment nor instrumentable; importantly, it is likely to embed non-random error onto the WEF antitrust survey.

We test and discuss some possible explanations for the observed bias: we find that both halo effects and a nation's modest experience with market institutions may be responsible for the bias. Underscoring these results may be the fact that survey respondents may not share a common understanding of competition policy. We offer some discussion supporting this latter point.

The presence of these biases may invalidate the usefulness of cross-nationally valid rankings of competition policy performance. On the bright side, however, the results suggest that efforts aimed at enhancing stakeholders' understanding of the objectives and limitations of competition policy might in turn enhance competition policy's impact as well as perceptions of performance.

Keywords: International Competition Policy, Performance Index, World Economic Forum Survey

JEL Classification: C81, K21, L40, L44, F53

I. INTRODUCTION

"... the efficiency and stability of an economy requires that all consumers be part of the franchise, in reality and in perception, so that good economic policies, including privatizations and free markets when they make sense, receive broad support."

Daniel McFadden, American Economic Association Presidential Address (2006)

Are competition policy programs in developing economies accomplishing what they set out to do? Appraising the effectiveness of a policy is of fundamental importance if a nation is to formulate the most cost-effective policy instrument for disciplining anticompetitive behavior. Answering such a question requires an unbiased measure of the quality of competition policy performance in a cross-nationally valid way.

Existing examinations of competition policy performance have varied in their choice of performance metric: some have relied on traditional industrial organization structural measures and variables (Tavares de Araujo 1996; Hayri & Dutz 1999; Dutz & Vagliasindi 1999; Kee & Hoekman 2003; Rodriguez 2006), on qualitative assessments (Fingleton, Fox, Neven & Singleton 1996), on idiosyncratic surveys (Serbrisky 2004). Still other studies have relied on subjective, perceptions-based surveys of performance (Lee 2004; Krakowski 2005; Nicholson, Sokol & Stiegert 2006; Sokol & Stiegert 2007; Rodriguez & DeNardis 2007). This perceptions-based, competition policy survey measure also figures prominently as an original source in the World Bank's composite measures of governance database (Kaufmann, Kraay and Zoido-Lobaton 1999) and the WEF Competitiveness Rankings, databases that have been richly mined by researchers and practitioners.

The practice of using perceptions-based surveys either individually or as an input into a composite measure has raised a number of concerns including the basic validity of the surveys and their sensitivity to external biases (Rodrik 2004; Van De Walle 2005; Knack 2006; Thomas 2006; Arndt & Oman 2006; Kurtz & Schrank 2007a, 2007b; Kaufmann, Kray & Mastruzzi 2007a, 2007b, 2007c). In this paper, we examine whether the WEF's perceptions-based survey measure of performance reflects measurement error. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Assessing Competition Policy Performance Metrics: Concerns about Cross-Country Generalisability
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.