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Opening Markets to Competition

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Practice Advice on Industry, Trade and Investment Policy

Opening Markets to Competition (OECD)

Summary Advice: The OECD advises that making market-opening reforms happen requires effective communication and consultation with stakeholders and the public, strategies for addressing the concerns of those who stand to lose out as a result of reform, institutions that are capable of sustaining wide-ranging, coherent and consistent programmes of competition-promoting reform, and a readiness to effectively use the reform opportunities that arise as a result of exogenous shocks, such as crises, and international undertakings.

Main Points:  Important steps include:

  • Identifying likely beneficiaries of reform, such as customers and potential new entrants, and enlisting their support;
  • Educating the public with salient facts about the costs of the status quo and the benefits of reform, particularly by showing how higher productivity can mean more resources for compensating losers and for cushioning the impact of other reforms;
  • Facilitating the inevitable bargaining among organised interests, to promote outcomes that address the legitimate concerns of potential losers but are nevertheless consistent with the public interest;
  • Taking advantage of the opportunities that may be presented by crisis situations, which can destabilise relationships among established interests and create openings to negotiate new ones;
  • Establishing effective “reform institutions” in the form of commissions or other bodies tasked to pursue regulatory reform or empowering competition authorities to promote competition and consumer protection, as well as to enforce existing competition law;
  • Making the most of the reform “leverage” offered by involvement in international organisations and negotiations; and
  • Easing the transition to the new arrangements by compensating losers and dealing with such problems as stranded assets, capitalised rents and sunk costs.

Source: OECD (2010) "Making Reforms Happen: Lessons From OECD Countries" OECD at http://www.oecd.org/site/sgemrh/46159078.pdf (accessed 21 March 2013).

Page Created By: Matthew Seddon on 21 March 2013. The content presented on this page is drawn directly from the source(s) cited above, and consists of direct quotations or close paraphrases. This material does not necessarily reflect the official view of the publishing organization.


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