PUBLIC POLICY

Public Policy

Public Policy

Objective

The objective of this study is to place in context the recent evolution of the regulatory framework and regulatory institutions by discussing some of the key factors that have affected the rate of economic growth in the UK economy over the past fifty years. Much can be learnt from comparisons between the UK experience and that of other large European countries during this time. Market structure and institutions have been quite different, although the ongoing process of integration, helped by the Single Market Programme, now appears to be increasing the degree of coherence between them across countries (Manin 2007 338-68). This paper also discusses the usefulness of the market competition policy and its affects on the UK economy.

Background

The principal focus of this study is the role of regulation in the UK and the design of competition policies. In the early post-war period the UK constructed institutions that differed from both the US and the German models, partly because of the common law tradition but also because there was no conception that these issues were an important part of the constitutional structure. Some of these differences may have contributed to deep seated problems and the comparatively poor growth performance of the UK economy for many years.

Problems

The existence of significant supply-side problems was recognised by the late 1970s and the Conservative government elected in 1979 was among the first in the OECD to address the need to restructure production in the public sector and to undertake a significant programme of privatisation and deregulation. Other problems, for instance in labour relations were also addressed. However, the list ofquestions was not complete, and (Griffin 2007 39-59) marks the beginning of a systematic critique of the deficiencies in human capital formation in the UK. These were not addressed by policy makers until the late 1980s, and only fully faced once the current Labour administration entered office in 1997.

There is a general consensus among many countries that trade liberalization fosters competition. Tariffs have been reduced to improve market access. This has had the effect of increasing liberalization and globalization of markets. However business has highlighted concerns about possible non-tariff barriers, which may act as barriers to trade. Anti-competitive behavior can take many forms, including; collusion to divide markets and/or increase prices; or abuse of monopoly power to keep out competitors and increase prices. Such practices can significantly harm consumers, other businesses and ultimately lead to a less efficient economy. National competition policies have therefore looked at ways of addressing the anti-competitive behavior.

Organization Agenda

The WTO already has some provisions on competition in existing agreements, example the agreements on services and telecommunications. Moreover, the Government thought that the development needs of countries would have to be fully considered.

There is a clear economic case for government intervention in markets where some form of market failure is taking place. Government can justify this by saying that intervention is in the public interest. Basically market failure occurs when markets do not bring about economic efficiency ...