This paper argues that the study of policy incidence in industrial organization needs to take the endogeneity of government into account. The point is made by investigating whether political considerations are important in terms of understanding the causes and effects of deregulation using data provided by the OECD. In particular, we address two interrelated questions: (i) do political and institutional factors matter in a systematic way in terms of the decision to deregulate, and (ii) if so, what does this imply in terms of the policy incidence of deregulation. Our results indicate that political considerations do matter. Most importantly, by introducing political and institutional variables into the empirical analysis of policy incidence, we find that policy conclusions are substantially different from an analysis that treats political factors exogenously. We conclude that the evidence is suggestive of the claim that a full understanding of the effect of government intervention in the marketplace implies a closer integration of political economy with industrial organization.
ZUSAMMENFASSUNG - (Ein Politökonomischer Ansatz der Industrieökonomie: Empirische Evidenz) In diesem Beitrag die Wechselwirkung zwischen Deregulierungsentscheidungen und Marktergebnissen am Beispiel von OECD-Ländern explizit untersucht. Es wird gezeigt, warum eine "exogene" Betrachtungsweise von Deregulierungspolitik zu einer inkonsistenten Einschätzung wirtschaftspolitischer Maßnahmen führen kann. In der Arbeit werden erste Ansätze beschrieben, die eine konsistente Analyse ermöglichen. Neben politischen Faktoren wird die Rückkoppelung des Marktergebnisses auf die Politikentscheidung berücksichtigt und anhand eines neuen Datensatzes für die OECD-Länder empirisch untersucht. Folgenden zentralen Forschungsfragen wird anhand der OECD-Deregulierungsdaten empirisch nachgegangen. Erstens, welche politischen und institutionellen Faktoren sind bei Deregulierungsentscheidungen von Bedeutung, und zweitens, wie verändert ein simultaner Ansatz, der die Wechselwirkung zwischen Politik und Markt zulässt, die Wirkungsanalyse von wirtschaftspolitischen Maßnahmen?
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Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number
FS IV 01-17.
Length: 25 pages Date of creation: Oct 2001 Date of revision: Publication status: Published under the Title "Endogenous Deregulation: Evidence from OECD Countries" in Economic Letters Vol. 81(1), Oct. 2003, pp.67-71. Handle: RePEc:wzb:wzebiv:fsiv01-17
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