Document Type

Article

Publication Date

2008

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.

Comments

Originally published:

Denardis, Lesley, and A.E. Rodriguez. "Assessing competition policy performance metrics: concerns about cross-country generalisability." Indian Journal of Economics and Business 7.1 (2008): 95+