Contemporary economies in Europe are constantly seeking ways to accelerate growth and achieve sustainable economic development. In this context, public policies play a crucial role: Among them are competition policy to monitor the behavior of firms, and procurement and regulatory policies which are designed to organize specific sectors. Recognizing the importance of public intervention as a major determinant of growth is only a starting point. Achieving good public policies requires the supervision of a public authority which implements efficient mechanisms in order to regulate the corporate behavior in firms. How these tools should be designed and implemented is subject to economic debate.
Over the last 30 years, the literature focusing on industrial economics has proposed theoretical rules to researchers on how markets should be organized and regulated in order to maximize social welfare. Very few empirical tests of these theories have been proposed however. The aim of this research project is to attempt to bridge the gap between theory and reality, so that the tools of the economists can be understood and used by practitioners. This project has four main objectives: (i) To propose guidelines that help separating regulatory models that represent the economic reality of an industry from those that describe the optimal mechanisms to which the organization of the industry should aim to (positive versus normative analysis), (ii) to propose original microeconomic, statistical and econometric methodologies which allow representing the characteristics of the markets under scrutiny, (iii) to collect data and construct original databases that will be run in this current project and could be useful in future research, and (iv) to derive results that are useful for practitioners.
To illustrate the variety of issues within the general theme of the project, we can raise the following questions: To what extent do the rules of competition in the markets affect the decisions of firms to improve their productivity and efficiency? Does competition guarantee low prices to consumers? Do the liberalization of utility industries and the search for new provision modes by public authorities accelerate the use of outsourcing? What are the efficiency conditions of competition for the market? How should the relationships between the governments and firms be organized in public-private partnerships? How should optimal regulatory rules be designed in order to maximize social welfare? Are regulators competent, sophisticated and benevolent enough to implement optimal regulatory rules? Should mergers between firms be allowed in industries where competition for the market is organized?
These are just some examples of issues where an approach involving economists working in different fields such as industrial organization, contract theory, competition policy, and applied econometrics is of major interest. The Université Paris 1, Paris School of Economics, and GREMAQ offer a set of recognized talent in these disciplines and the first objective of this project is to unite the forces inside a team around these issues, which we think are important both in terms of research and public policy.
Dates : 01/01/2013 – 31/12/2016
Contact: Wilfried Sand-Zantman