16 Jul 2010

Product Market Reforms in EU Countries: Are the methodology and evidence sufficiently robust?

Jacques Pelkmans

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This working paper critically discusses the most prominent empirical approach used to measure regulation in EU countries: the OECD product market regulation (PMR) indicators. There are two vintages of PMR: one based on the period 1997-2005 and an improved ‘integrated’ PMR developed over 2006-09. The author finds that the latter constitutes an improvement, reducing or eliminating some of the shortcomings of the first PMR indicators, but that a systemic EU-neglect bias is not addressed and remains a disturbing facet. He first reviews the considerable merits of the PMRs and identifies no less than nine advantages. But the bulk of the paper is devoted to a series of omissions, weaknesses and shortcomings which, broadly speaking, have the unfortunate effect of making EU countries’ goods and services markets appear more restrictively regulated than they really are, compared to other OECD countries.

Jacques Pelkmans is CEPS Senior Research Fellow and Jan Tinbergen Chair and Director of the Department of European Economic Studies, College of Europe, Bruges.