1. Regulation vs protection of services: where to draw the line? Dr Philippa Dee Crawford School of Economics and Government

2. Defining protection  ‘Unduly’ restricting competition restricting entry into the market restricting competition for the right to be sole operator restricting exit from the market  Prices will be higher than they need to be because incumbent producers can earn higher profits because production costs are inflated (from red tape etc)

3. Are standards a problem? Standard voluntaryStandard mandatory No market failure NoYes Market failure NoMaybe

4. Types of market failure – standards as a solution?  Scale or network economies → natural monopoly Requirements for interoperability or interconnection Does this require a single standard – if so, whose? And who will decide?  Information asymmetry Standards to ensure quality Do they operate ex ante or ex post?

5. Standards to ensure service quality  Standards that operate ex post Do not prevent entry, but punish bad behaviour or compensate losers after the event Standard typically defined in terms of quality of output Market-based solutions  product liability, professional indemnity insurance, warrantees  reputation  Standards that operate ex ante Limit entry Standard typically defined in terms of quality of inputs Licensing, accreditation, quality assurance

6. Preventing barriers to trade – depends on type of trade (1)  Intra-EU trade trade between complex, advanced economies not driven by differences in labour-capital availability driven by gains from specialisation and gains from variety trade is typically two-way  Harmonisation of standards  Mutual recognition

7. Limiting barriers to trade – depends on type of trade (2)  Asia-Pacific trade trade between economies at very different levels of development often driven by differences in labour-capital availability, even for services trade is typically one-way  Minimum acceptable standards  Unilateral recognition

8. Regulation vs protection of services: where to draw the line? Dr Philippa Dee Crawford School of Economics and Government