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Competition and quality in the notary profession

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  • Richard Nahuis
  • Joëlle Noailly

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Abstract

The 1999 Dutch Notary Act has initiated an ambitious deregulation process in the market for notary services in the Netherlands. We evaluate the impact of this liberalisation policy on (i) the level of competition in the profession and (ii) the quality of services. We compare the level of competition before and after the liberalisation using two different indicators, namely a relative-profit indicator and a variation of the Bresnahan-Reiss indicator. Using the relative profit indicator, we find that the level of competition has increased after 1999. We find, however, no significant difference between the level of competition in 1996 and in 2002. This is particularly clear when we measure competition taking the local market as the relevant market for notary services. The results on the national market are more mixed and there is some evidence that competition in 2002 is higher than in 1996. Using the Bresnahan-Reiss indicator, we find that entry does affect conduct in the notary market, but again that the level of competition in the local market for notary services in 2003 does not significantly differ from the 1995 level. We also examine whether competition affects the quality of notary services. We use both subjective and objective measures for quality of notary services. We find that subjective quality - the perceived level of service by clients - is, if anything, negatively affected by competition. Using objective quality, i.e. quality that is not observable to clients, we find that in 2003 competition leads to a deterioration of quality, as the quality of monopoly notaries outperforms the quality of oligopoly notaries. This was not the case in 1995. Confronting our empirical findings with qualitative insights, we present options for policy.

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Bibliographic Info

Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Document with number 94.

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Date of creation: Sep 2005
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Handle: RePEc:cpb:docmnt:94

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  1. Jean M. Abraham & Martin S. Gaynor & William B. Vogt, 2005. "Entry and Competition in Local Hospital Markets," NBER Working Papers 11649, National Bureau of Economic Research, Inc.
  2. Boone, Jan, 2004. "A New Way to Measure Competition," CEPR Discussion Papers 4330, C.E.P.R. Discussion Papers.
  3. Nicole Kuijpers & Joëlle Noailly & Ben Vollaard, 2005. "Liberalisation of the Dutch notary profession; reviewing its scope and impact," CPB Document 93, CPB Netherlands Bureau for Economic Policy Analysis.
  4. Caroline Minter Hoxby, 1994. "Does Competition Among Public Schools Benefit Students and Taxpayers?," NBER Working Papers 4979, National Bureau of Economic Research, Inc.
  5. Nicola Cetorelli, 2002. "Entry and competition in highly concentrated banking markets," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 18-27.
  6. Bresnahan, T.F & Reiss, P.C., 1989. "Entry And Competition In Concentrated Markets," Papers 151, Stanford - Studies in Industry Economics.
  7. Dranove, David & White, William D, 1994. "Recent Theory and Evidence on Competition in Hospital Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 169-209, Spring.
  8. Asplund, Marcus & Sandin, Rickard, 1999. "Competition in interrelated markets: An empirical study," International Journal of Industrial Organization, Elsevier, vol. 17(3), pages 353-369, April.
  9. David Dranove & Mark Shanley & Carol Simon, 1992. "Is Hospital Competition Wasteful?," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 247-262, Summer.
  10. Bresnahan, Timothy F & Reiss, Peter C, 1990. "Entry in Monopoly Markets," Review of Economic Studies, Wiley Blackwell, vol. 57(4), pages 531-53, October.
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Cited by:
  1. Noailly, Joëlle & Nahuis, Richard, 2010. "Entry and competition in the Dutch notary profession," International Review of Law and Economics, Elsevier, vol. 30(2), pages 178-185, June.

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