News

22-12-2005
Yes, market opening does work
Today, the European Commission has made public a Copenhagen Economics study on the overall economic impact due to market opening to promote competition in network industries. The study shows that market opening of network industries has generated economic growth and created new jobs. “Overall, we confirm the existence of economic gains. We estimate that market opening in network industries increases overall EU15 welfare by 1.9 percent or €98 billion and gives rise to additional employment corresponding to about 500.000 jobs until the turn of the century”, says Dr. Claus Kastberg Nielsen, CEO of Copenhagen Economics. The study shows that the member states that have been quick to implement the EU directives on telecommunications and electricity have gained more than the member states that have implemented the directives more slowly. This is due to the overall gains being primarily associated with market opening in telecommunication and electricity above all becausee these two sectors account for two thirds of all output from the network industries covered by the study. “We find that the Nordic member states (Sweden, Denmark and Finland) have been the most aggressive in opening their markets for telecommunications and electricity, and they are also the ones reaping the highest welfare and employment gains. Other member states such as Greece have hardly gained anything in terms of welfare and employment, which is due to slow Greek market opening in telecommunications and electricity”, says Dr. Kastberg Nielsen. The study covers all EU15 member states over the last 10-15 years. The network industries included in the study are: Electricity, telecommunication, rail passenger transport, rail freight transport, urban transport, air transport, natural gas, and postal services. Further information: Dr Claus Kastberg Nielsen Market opening Market opening sectoral analyses Summary of country specific gains Link to the Commission homepage
12-12-2005
Don’t toss a coin over cartel damages

This is the warning Copenhagen Economics issues to all parties in the damage claim cases following the Swedish asphalt cartel in the leading Swedish business paper “Dagens Industri”. In Denmark, a cartel damages case was recently settled and we are concerned that the lack of economic evidence in the Danish case may also surface in the Swedish damage claims proceedings. Without economic support the parties expose themselves to unnecessary large risks. To assess the damage, the actual price paid should be compared with the price that would have prevailed in the absence of the cartel. To estimate this price is no trivial matter. But far from impossible. In the Danish case, one claim was that the price before the cartel was the relevant comparison price. Another, that the price after the cartel was the correct non-collusive price. Economic theory cannot decide which of these claims are true. Thus the court was left to make an arbitrary decision. There are however several economic techniques that could have been used to assess the claims. Using them could have changed the outcome. In order not to face the same coin-tossing scenario in the Swedish proceedings, we advise all parties in the damage claims cases to do their homework thoroughly, for the sake of both the consumers and the shareholders. Further information: Dr Claus Kastberg Nielsen

08-12-2005
Denmark close to being European Competition Champion
This is the conclusion reached by Copenhagen Economics in a recent comment in the leading Danish business newspaper ‘Børsen’. The comment has been prompted by the release of the bi-annual report from the Danish Economic Council in November 2005. The report thoroughly discusses the state of competition in Denmark and calculates the gain in economic welfare Denmark could achieve if competition was as intense as in the United States. According to the Council, the welfare gain would be an astonishing 30 billion DKK. However, if these calculations are true and correct, Danes should be pleased by the fact that, in a European perspective, Denmark is probably the best among equals. The background study used by the Economic Council reveals that if competition in Denmark would be similar to Euro-land (an aggregation of Italy, France and Germany) then Denmark would experience a massive welfare loss. Why? Because competition is much more intense in Denmark than in Euro-land. For the Economic Council, this must be eye-opening as the Council previously repeatedly has concluded that competition in Denmark is weaker than in the rest of EU. Further information: Dr Claus Kastberg Nielsen See the comment in Danish
06-12-2005
Copenhagen Economics Model reveals economics of anti-dumping
Anti-dumping measures are the most commonly invoked trade defence instrument in the EU, but they are only allowed when the interest of the Community as a whole calls for intervention. In order to highlight this sometimes briefly treated requirement, the Danish government commissioned Copenhagen Economics, in co-operation with Professor Joseph Francois, to develop an operational tool for economic impact assessments of anti-dumping measures. The resulting Copenhagen Anti-Dumping model allows for transparent and efficient analysis of the costs and benefits of imposing anti-dumping measures for individual Member States and for the Community as a whole. Application of the model to four recent anti-dumping cases reveals that the economics of anti-dumping measures are less favourable than commonly assumed in investigations. Further information: Mr Martin Hvidt Thelle Read the report online
06-12-2005
Swiss services liberalisation; economic effects
Services play a significant role in modern economies, but regulatory barriers to services provision are often impeding the provision of services thereby preventing full exploitation of the economic potential. In a study prepared for the Swiss State Secretary for Economic Affairs (SECO), Copenhagen Economics shows that Switzerland can expect an increase in economic activity of up to 2 % in case of services liberalisation. For more information see the press release from SECO Further information: Mr Christian Jervelund Read the full report