Distributional Macroeconomic Effects of the European Union Competition Policy: a General Equilibrium Analysis

Evidence on the links between effective competition policies and their distributional effects and on countries’ ability to manage negative macroeconomic shocks and associated repercussions on the income of households at the bottom of the income distribution is relatively scarce. This chapter proposes a novel methodology to assess distributional macroeconomic effects of important merger and cartel decisions by the European Commission. A unique database containing microeconomic estimates of customer savings associated with merger and cartel decisions is exploited to run policy simulations using a dynamic stochastic general equilibrium model. The model allows the authors to investigate the effects of European Union (EU) competition policy interventions not only on standard macroeconomic variables such as gross domestic product (GDP) and employment, but also on distributional outcomes across households with different skill levels and across different types of income earners (capital owners, wage earners, and benefit recipients). The policy simulations presented include both direct and indirect (deterrent) effects of competition policy interventions. They show that competition policy has a sizeable impact on GDP growth and important redistributive effect.

DIERX Adriaan;  ILKOVITZ Fabienne;  PATARACCHIA Beatrice;  RATTO Marco;  THUM-THYSEN Anna;  VARGA Janos; 

2017-07-27

International Bank for Reconstruction and Development/The World Bank

JRC98038

978-1-4648-0946-0,   

https://elibrary.worldbank.org/doi/abs/10.1596/978-1-4648-0945-3_ch6,    https://publications.jrc.ec.europa.eu/repository/handle/JRC98038,   

10.1596/978-1-4648-0945-3_ch6,