Analytical framework for economic analysis Sample Clauses

Analytical framework for economic analysis. The analytical framework consists of an economic model which sets out hypotheses as to how the exclusive reservation of service activities might be expected to have economic impacts (positive, negative) on the size and operation of the market. Mapping out the mechanics of an economic model is an important first step in testing the extent to which the exclusive reservation of (service) activities to professionals holding specific professional qualifications are having an impact in practice. The various elements of the model showing the causality chain are summarised in the following diagram: Reserve of activities? Market structure and barriers Intermediate impacts on sector Type of profession Regulated Profession Unregulated Profession Figure 3.1: Theoretical model – the economic impacts of reserves of activities on services markets Yes, exclusive reserve Yes, shared reserve No reserve - Restricted market with reduced market size - Barriers to entry – high - Less competition Barriers to entry - medium - Barriers to entry – low- medium - Other professions able to enter market (provided they have appropriate expertise). - More competition - Strong consumer confidence in quality of services - Countering market failures e.g. reduced risk of information asymmetries, preventing low quality professionals from providing services) BUT - Limited no’s of professionals able to enter market - Lack of competition among existing market participants -Varying level of consumer choice (depends on no. of professions that share reserve ) - Medium level of competition - Increased consumer choice But risk of lower levels of consumer protection (can be mitigated by other approaches to regulating the market e.g. self-regulation and voluntary codes of conduct, certification schemes) - Lack of new market entrants from other sectors - Lack of consumer choice - Reduced scope for professional mobility (sectoral over-fragmentation, narrow competence scope). Market performance - Increased prices (cost of services for consumers / intermediate users) - Less incentive for firms to innovate - Lack of economies of scale and scope - Smaller size of market - Lower prices (lower cost of services for consumers / intermediate users) - Greater economies of scale and scope - Larger market size Knock-on effects Longer-term impacts on sector Global impacts on economic competitiveness - Reduced economic competitiveness (e.g. lack of structural flexibility to respond to shifts in demand) - Lack of full ...
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