The Gains from More Competitive Regulation Settings in Canada

By Iorwerth, Aled ab; Rosell, Carlos | International Productivity Monitor, Spring 2018 | Go to article overview

The Gains from More Competitive Regulation Settings in Canada


Iorwerth, Aled ab, Rosell, Carlos, International Productivity Monitor


In addition to setting the right framework for economic growth, key objectives for government are attaining desirable non-financial outcomes for society such as safe workplaces and a clean environment. However, the multitude of such objectives and the many means of achieving them make design of regulation exceedingly difficult. For example, a particular objective (e.g. a given level of product safety) can be achieved through several approaches, with some designs being more economically costly than others.

In that context, there are potential gains from rationalizing and improving the regulatory framework, the regulations, laws and other rules influencing economic activity. However, the magnitude of these potential gains is unclear. The objective of this article is to examine the potential benefits of making regulations, laws and other rules more competition friendly after taking interactions within the economy into account. We concentrate in particular on the scale at the aggregate level of comprehensive reform rather than targeting individual changes. To this end, we introduce the classic Solow model with a wedge between the resources spent and those that are effectively used to build productive capital. In other words, we assume the competition inhibiting nature of some regulations dissipate productive resources. In practical terms, and in the tradition of Mankiw et al. (1992) and Islam (1995), we estimate a dynamic equation for GDP per capita with an added term reflecting the extent to which regulations are anti-competitive.

Critical to this analysis is an indicator of the anti-competitiveness of regulation. To this end, we utilize the product market regulation (PMR) measures developed by the OECD. These measures are compiled from a survey of laws and regulations in each country. (2) They capture a variety of aspects such as state involvement (e.g. does the government restrict purchase of shares by foreigners?) and business operation restrictions (e.g. are there restrictions on store opening hours?) that increase the economic costs by limiting competition and the optimal allocation of resources. As such, changes in these indicators do not necessarily imply weaker standards on pollution, and health and safety, but rather affect the extent to which existing regulations reduce competition. Indeed, improvement in these indicators is consistent with the objective to put in place smarter, more effective approaches to regulation that enhance economic competitiveness, while maintaining high standards of public health and safety, and protecting the environment.

It is important to note that the OECD PMR indicators capture regulations, laws and other rules set by different levels of government and by those organizations to which regulatory power has been delegated such as self-regulating professional associations. Consequently, we acknowledge that our use of the term "regulation" does not strictly adhere to the definitions used by different governments or international organizations and that, in some contexts, the broad term "policy" could be used interchangeably with "regulation." Finally, the set of regulations on which the measures are based is narrow compared to the universe of all regulatory policies affecting economic activity. As a consequence, cross-country differences in the PMR indicators only arise from cross-country differences over relatively few policies. Nevertheless, these measures are adequate for our purposes so long as the regulations on which the indicators are based reflect their broader universe. We believe that the OECD indicators are the best available measures to evaluate the degree to which countries' regulatory frameworks inhibit competition.

Though our methodology does not treat the possible endogenous relationship between growth and regulatory settings, our findings suggest anti-competitive regulation lowers GDP per capita, particularly if it raises barriers to trade and investment. …

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

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
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

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

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

The Gains from More Competitive Regulation Settings in Canada
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?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
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.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, 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." (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

    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.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.