Assessing Competition Policy: Methodologies, Gaps and Agenda for Future Research

Research on the evaluation of competition enforcement has probably never been more timely than today. Competition authorities run on scarce resources and are under serious pressure to make as big an impact on anticompetitive practices as possible. A recent paper by Davies and Ormosi surveys the relevant literature in order to (i) assess the fitness for purpose of the main quantitative methodologies employed, and (ii) identify the main undeveloped areas and unanswered questions for future research. The paper suggests that policy evaluation is necessarily an imprecise science and that all existing methodologies have strengths and limitations. Areas where the need is most pressing for further work are identified. Due to the inadequacy of the methods applied for impact evaluation previous estimates are often corrupted by selection bias. The overarching objective of the paper is to draw attention to those instances where selection bias is most prevalent. In passing the paper emphasises the need to bring conscious discussion of the counterfactual firmly into the foreground. More work could also be done on evaluating the deterrent effect of policies and the detection rate of enforcement and the paper sets out an agenda of future work in this direction.

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