Should Australia Encourage Developing Countries to Adopt Competition Laws?

Requiring developing countries to adopt competition laws has become a standard element in Free Trade Agreements between those countries and developed countries, and in the check list of measures sought by the World Bank and other multilateral institutions. However, there is little reason to think competition policy will increase welfare in those countries, especially as its proper implementation requires institutional capabilities that most developing countries lack. Despite this, the ASEAN countries, along with many other developing countries, have adopted competition policies that mirror all the prohibitions typically found in developed countries. It is suggested that it would be preferable were those prohibitions dropped, and competition policy refocussed on to a narrower set of instruments and objectives.ASEAN, Australia, Competition Law, Antitrust Law

Price Squeezes and Imputation Tests on Next Generation Access Networks

A vertically integrated firm that wholesales to its retail rivals can, if it has sufficient market power, set the margin between its retail and wholesale prices so as to harm its rivals. Conventionally, an imputation test is used to determine whether such behavior is being undertaken. Such tests are common in electronic communications, and the EC calls for their potentially intensive ex ante application in the supply of NGANs. This paper shows that while imputation tests are helpful analytical tools for understanding the nature of price squeezes, difficulties associated with implementation, which are sharp in an NGAN context, can make them misleading in practice. Instead, price squeezes are best dealt with through the rigorous comparison of expected outcomes, given the alleged anticompetitive behavior, with the outcomes expected in that behavior’s absence. Such analysis is not suited to ex ante application.price squeeze, imputation tests, next generation access networks, vertical discrimination, electronic communications, regulation

The economics of buying complex weapons

Defence procurement is an important current policy issue in Australia. On one hand, there is a build-up in defence outlays as a result of the war on terrorism, our military’s involvement in peace missions in our region and beyond, and changes in the threats facing Australia. Given the extra resources directed to defence, it is natural to expect that these expenses will be subjected to a greater degree of scrutiny. On the other hand, greater public scrutiny also follows from a history of major delays and cost overruns in the Collins Class submarines and the Jindalee Operational Radar Network projects

Some economic aspects of the weapons systems acquisition process

In this paper we are concerned with the procurement of complex weapons systems. We review the major characteristics of the weapons systems acquisition process that distinguish this process from a standard regulation problem. We then discuss some of the outcomes of the acquisition process and focus on the relevance of the economic theory developed over the last twenty-five years for creating remedies to mitigate the intrinsic inefficiencies in the weapons systems acquisition process

New directions in Australian air transport

The events of September 11 2001 and the Ansett collapse a few days later have had a major impact on the Australian air transport markets. In this paper, we examine the immediate and longer-term competitive outcomes associated with these developments, and review the policy issues that arise

Why Johnny can\u27t regulate: the case of natural monopoly

This paper examines the difficulties inherent in regulation as a solution to market failure and, especially, to natural monopoly. It highlights the way regulation itself introduces new risks into the supply of natural monopoly services, including the risk of regulatory opportunism, and argues that delegating regulatory functions to ‘independent’ regulators does not in itself solve those risks

Australia\u27s defence: a review of the \u27reviews\u27

The Australian Defence Force is held in high regard; the Department of Defence is not. Longstanding concerns about inefficiency, compounded by a succession of fiascos and bungles, have entrenched the perception that Defence is poorly managed. Earlier attempts at reform have yielded mixed, often disappointing, results (see Ergas and Thomson 2011), and the years since 2009 have seen a series of reviews aimed at improving performance, culminating in 22 defence-related reviews in 2011–12 alone

Australia\u27s hand out addicted car industry needs some tough love

The Federal Government will contribute millions of dollars to Australian car manufacturers Holden and Ford in an effort to keep Australia\u27s automotive sector afloat. The government will add $34 million to a$103 million rescue package for Ford\u27s Victorian assembly plant that will see the facility remain open until at least 2016. The funding, which will be met by a grant from the Victorian Government, comes as Holden is reportedly negotiating with Canberra over co-investment to produce a new Commodore model in 2018. But should governments continue to bail out an industry that is lagging in Australia and internationally? University of Wollongong Professor of Infrastructure Economics Henry Ergas explains the problems of extending further assistance to the ailing sector

Australia should delay a carbon tax until the rest of the world acts

The big question about the carbon tax is not whether it\u27s a good or a bad idea in theory. The major issue is whether it makes sense for Australia to implement it at a time of great uncertainty, both in terms of economic outlook and the extent and nature of international action. To my mind a carbon tax is not desirable. Australia\u27s prosperity is based on a resource endowment that is carbon intensive, both in terms of our mineral and our agricultural sector. Moreover, much of that carbon intensity is not amenable to technological quick-fixes. For instance, there is little that can be done to reduce fugitive emissions in mining. Global warming is a global problem. Unless major emitting countries engage in abatement efforts, action by Australia is pointless. As well as being pointless, that action would be highly costly. Economic analysis shows - and experience confirms - that the world\u27s mineral supply responds quickly to relative prices. If we tax our mineral exports, and competing sources of supply do not, world supply will shift to the untaxed sources, reducing our export volumes compared to the levels they would otherwise have attained