Competition improves inequality?

There's a fascinating debate going on about whether market power makes income inequality worse or, putting it the other way round, whether more competition would reduce inequality.

It's been spurred in particular by a piece which appeared recently on the OECD's website, 'Inequality: A hidden cost of market power', where you can find links to the full working paper by three OECD staff economists and to a shorter, more plain English version published by Competition Policy International (CPI) as part of a symposium, 'Antitrust's Inequality Conundrum?'.

The gist of the idea is straightforward. Businesses are disproportionately owned by the rich, which is largely uncontroversial, since we know that there is a heavily skewed distribution of wealth. If businesses manage to exert market power, they can raise prices to above-competitive levels. Consumption is relatively evenly distributed, so everyone feels the pain to much the same degree. But the benefits from above-normal profits flow to the owners of the firms, whose incomes increase even further. Inequality worsens.

The authors have even had a go at measuring the impact, based on sectoral data on firms' mark-ups over cost in eight economies. They've got a model where they can use observed data to back out what pricing in a competitive economy would have looked like, after allowing firms to earn a competitive return. "To illustrate", as they say on pages 17-18 of the full paper, "in the sector of wholesale and retail trade and repairs, the mark-up observed in the UK is 16% and the minimum mark-up (found in
Germany) is 12% [i.e. they're taking this as a benchmark of what a 'normal' mark-up needs to be]. The UK excess mark-up for that sector is then calculated as the difference, i.e. 4.0%". They do the same calculation across all sectors and all economies.

Summing up for all eight countries and sectors, they find the average 'normal' mark-up over cost to be 10.2%, but the actual observed mark-up to be 18.0%, leading to an 'excess' market-power-driven mark-up of 7.8%. And with their model they trace the distributional consequences of this excess mark-up (p23): "Market power may contribute substantially to wealth inequality, augmenting wealth of the richest 10% of the population by 12% to 21% for an average country in the sample...Market power may also depress the income of the poorest 20% of the population by between 14% and 19% for an average country in the sample".

It makes for some pretty dramatic pictures, such as this one from the CPI version of the paper

As you can imagine, this graph has been making the rounds of social media like nobody's business.

But you'll have noticed that the authors carefully said "may" contribute and "may" depress, and that I've included a question mark in the title of this post. We needed to: while it is tempting for pro-competition campaigners to add "substantially lower inequality", like that in the graph, to the list of good things that more competitive markets might achieve, it's a stretch. There's a lot that this model glosses over.

For one thing, it assumes that wages don't rise in response to the higher prices consumers are facing: that's a big ask right there. As the authors concede (p10 of OECD paper), "In fact, if market power increased prices and wages in the same proportion, the redistributive effect of market power would likely be negligible, since workers and business owners would be affected in the same way".

There's also the point that some of the above-normal profits are entirely benign, and not something to be regulated away or deplored: if you've got the hottest software or smartphone or blockbuster movie, good for you. As the authors say (on p6 of the CPI version), "We are by no means suggesting that wealth acquired from market power is in any general sense improper. Much of the profit from market power, and quite possibly the majority, is derived from legitimate sources, such as patents, trademarks and brand differentiation". You should really only be bothered about the inequality (and other) impacts of "bad" market power from, for example, excessively concentrated markets.

And you can pick other holes in it, as for example University of Michigan professor Daniel Crane does in his symposium contribution, "Further Reflections On Antitrust And Wealth Inequality" (there are other critical articles there, too). Pro-competition interventions might themselves be regressive: he has an example of one constraining real estate agents, but benefiting their, wealthier, house-selling clients. The profits from market power don't always accrue to the shareholders, but get siphoned off by key personnel or indeed employees more generally. And the costs mightn't be borne as much by the ordinary guy in the street as you might at first think. It may be, for example, that high market power prices in the health sector might be paid largely by the government, which is actually funded on some progressive tax basis. Richer, higher rate taxpayers end up wearing the bill.

I'm kinda inclined to the view, which Crane says (p5) is the "most salient" response to his critique, that, all qualifications considered,  "Even if many other interests within the firm capture a share of monopoly rents, shareholders capture enough of them to skew this one effect to such a degree that it necessarily outweighs all countervailing effects".

But as Crane puts it, "Maybe. I don’t know. Nor, I suspect, do the people making this assertion. And that’s my point. Before turning to antitrust as a lever to fight income inequality, we need to admit a degree of modesty about what we really know and don’t know. The story is not so simple as it is made to seem".

He's right. We don't know for sure that less market power means lower inequality, even if, to some of us, it looks the way to bet: after all, how likely is is, really, that those with the incentive and ability to raise prices would end up flattening the income distribution?

Fortunately inequality is high on many institutions' and researchers' agendas at the moment, and we'll be seeing a lot more research in this neglected area: there's been surprisingly little until quite recently. Even if they're only along case study lines, like the Mexican mobile phone prices cited in the CPI version of the OECD paper, they'll be a welcome advance in our understanding of something we in the economics and policy trades should have looked at long ago.

And never the twain shall meet*

According to the text of the Labour/Greens confidence and supply agreement, "Auckland’s East-West motorway link will not proceed as currently proposed".

I'm not surprised, though before I was asked to look at the East-West Link, I'd have had a different reaction. Auckland's been so short of infrastructure investment, and transport investment in particular, that I would have welcomed anything at all that helped, even if it wasn't especially efficient. Two billion dollars, the ballpark cost of the Link, however poorly spent, had to be some sort of advance on half of five eighths of the proverbial alternative.

And then the Campaign for Better Transport asked me to have a look at how the New Zealand Transport Agency had signed off on the Link. A Board of Inquiry had been set up to decide whether to approve the Link: would I be interested in putting in an expert view? I would. I did.

I was rather surprised when I had a look at the benefit/cost ratios for each of the six options that the NZTA had shortlisted for the Link. The option chosen was far from being the best on a benefit/cost basis. Compared to the chosen one, there was an alternative that would have achieved slightly more benefits, but for only 60% of the cost. And there was another one that was less ambitious - only half of the benefits - but was very cheap indeed, at only a quarter of the cost. The preferred option was, bluntly, inefficient.

But mankind does not live by cost/benefit ratios alone, and the NZTA, sensibly, also put all six options through a 'multi criteria analysis' wringer, prodding them from every possible perspective, including Maori, historical, and environmental.

Again the preferred option didn't stand out. That cheap and cheerful one - half the benefits but very cheap to do - scrubbed up well (again). And even if you played around with the weightings, as I did, I couldn't get the NZTA's preferred option to come out on top. Even when I gave double weighting to transport outcomes, which after all might be what the NZTA was prioritising, there were better ways of doing the Link than the NZTA's golden-haired choice.

As happens in these sorts of proceedings there's a "hot tub" where the economists get together to say what they can agree on and what they can't. On this occasion there were five of us: in the post-tub joint statement we put in to the Inquiry, four of us agreed that "The [NZTA's] application [to build the Link] and subsequent evidence does not establish...How Option F [the NZTA's preference] was arrived at as the preferred option and, in particular, how the Option reconciled with the NZ Transport Agency's own system for prioritising Projects". The NZTA's economist disagreed.

In sum, I couldn't make much sense of the NZTA's justification for ploughing ahead with their preferred option, and said so when I fronted up to the Inquiry. If you're seriously short of better things to do, the transcript is here. I come onto the stage at page 4897 (!) and the most relevant bits are on pages 4907-10 where I have trouble with the NZTA's thinking behind its choice and finish up by rhetorically asking the NZTA, "with all that lovely information, why did you do F?"

Lots of other people have been having trouble with the decision, too. Cameron Pitches of the Campaign for Better Transport has had a go at 'The Economics of the East West Link' with part two here, and the Greater Auckland site has a string of posts, with highlights being the latest 'Where to now for the East West Link?' and the earlier 'Rethinking the East-West Link'.  The Spinoff's  Simon Wilson has also been on the case, with 'The most expensive road in New Zealand history is coming to Auckland. Why?' and '‘I have not quantified the benefits’: the astonishing truth about NZ’s most expensive road ever'.

Bottom line: my guess would be that you could deal to a lot of the Onehunga/Penrose congestion with a slimmed-down version of the Link, and still have a billion dollars left over. That's a rather irresistible bit of economic - and political - calculus.

What happens to the Inquiry itself? Far as I know, it's still due to deliver its final decision by December 22, and I hope it's let do it. The board seemed to me to be a very sharp collection of folks, and I'd like to hear what they made of it all, even if swathes of it may have become moot.

There's also a point of law they had to consider that could be important for future regulatory proceedings. Was the board constrained to examining only what the NZTA put in front of it, or could it enquire into the NZTA's thought processes when it came up with the scheme?

As the chair of the Inquiry said (p4909, para 35)

it seems to be  reasonably clear law that we as a Board can't sit down and start scratching our heads and drawing alternative lines over bits of paper and saying, "Well, this option might have been better than that option" etc. We really have to judge on the merits what's been served up to us.

But on the other hand as one of his colleagues said (p4913, para 15)

I think you're quite right that we have to be satisfied that there was a robust process of evaluation of the alternatives.

In practice it may not make a huge difference. Submitters could (and did) propose that the NZTA's preferred option should have been redirected around this town centre, or slimmed down along that stretch, or mitigated a different way, and would have effectively smuggled the NZTA's discarded options back into the proceedings irrespective of whether the Board itself did not want to revisit the NZTA's original decision.

But it's still an important point. My preference lies down the end of tyre-kicking that "robust process of evaluation of the alternatives". If, by analogy, some group appeared before the Commerce Commission for authorisation of an otherwise anti-competitive arrangement that nonetheless has a net public benefit, I would expect Commissioners to ask, very early in the piece, did you consider other or better or less intrusive ways of doing this? What did you find? Why did you go with this one? And if they weren't satisfied, I'd expect them to say, go back to the drawing board.

If Boards of Inquiry find they don't have these powers under the Resource Management Act process, then maybe we should fix the Act so that they do.

*OK, pretty corny, but if you don't recognise it it's a bit of Rudyard Kipling: "Oh, East is East, and West is West, and never the twain shall meet"

Dear Kris...

Welcome to your new role as competition czar and overlord of the Commerce Commission.

It's now up to you to make sure that consumers continue to get a good choice of goods and services at fair prices, and that businesses can compete vigorously for their custom.

You'll find that the Commission, and the competition policy bits of MBIE, are full of talented people with their hearts in the right place. You'll also find that many of them are frustrated by the glacial pace of policy change.

So my first suggestion is: don't be another obstacle in their way. Move things along.

What things? Start with these.

Currently the plan is that the Commission will - sometime - be allowed to look into competition problems, but only if asked to by the government (the jargon is "market studies").

By all means keep the option for you and your colleagues to ask the Commission to look at stuff. You'll find (for example) there's a lot of support for a study of our petrol industry.

But a much better plan would be to let the Commission also look at things off its own bat. That's normal overseas, by the way, and if you want to see a good example of how it works, look at the Australian Competition and Consumer Commission's series of  reports on petrol markets in Oz. Here's their latest media release, 'Lack of competition driving high Brisbane petrol prices'.

Keep a budget lid on it, though. Currently the plan is, the Commission will get $1.5 million a year, max. That's plenty, and will give them the right incentive to be efficient.

Next there's cartels. We were going to jail 'hard core' cartelists, the guys who secretly get together in hotel rooms at trade shows and conspire to fix prices, rig auctions, and carve up the world's markets among themselves.

One of your predecessors said, Nah, let's not feel their collar. He was wrong. The Aussies - and others - who can jail these crooks have the right end of the stick.

And while you're dealing to cartelists, take away the special treatment for the shipping lines. They still get their own cosy bit of the Commerce Act. They shouldn't, especially since they've been revealed to be global cartelists (you'll enjoy this). If they need to coordinate things, have them get an authorisation from the Commission, just like everyone else.

Now a trickier one. It's tricky here, and everywhere, but now you're The Man who's got to make the call.

It's what to do when a big company is using its size to impede or eliminate smaller competitors ("abuse of market power"). We have a law against it - section 36 of the Commerce Act. But the law is broken. It's incapable of pinging anything except in very rare cases. It's like nailing jelly to the wall. Disclosure: I've been one of those jelly-nailers.

But you don't have to take my word for it: you'll be having a early coffee, I dare say, with Mark Berry at the Commission, the current chief jelly-nailer. He'll tell you that s36 is knackered, and he's right.

Answer? The Aussies have turned their minds to this (their "Harper review") and fixed their law. So the answer is, import their wording holus bolus into our own Commerce Act. And strike a blow for trans-Tasman harmonisation while you're at it. The media release writes itself.

While you're having your first meet and greet coffees, have a natter with Murray Sherwin and the guys at the Productivity Commission. Your colleagues with economic portfolios will soon be tearing their hair out over New Zealand's poor productivity performance: as Murray and his mates will tell you, one of the answers is stronger competition to put the heat on business performance.

One last thing.

It's easy to get into an anti-business mindset in the competition and regulation game - all these cartels and abuses of market power and whatnot.

Don't go there. The thing that you've got to stay focussed on is the competitive process itself. That's what delivers the benefits to consumers, and to the businesses who best meet their needs.

And if anyone down the big end of town starts giving you gyp about an anti-business stance, quietly remind them that the primary victim of cartels and other rorts is often other businesses. They want an example? The cardboard box rort in Australia: every company on either side of the Tasman  (including some very large ones) who wanted to put their stuff in a box was being ripped off.

That's enough to be going on with - good luck!

Looking for ideas?

So we've got a new government, and lots of people have been wishing things on them.

And so am I.

Here's one that's well up my list: roll out the infrastructure we need, and pull finger about it while you're at it.

The outgoing government, for all the good stuff it did in some areas, was desperately slow at getting long overdue infrastructure built: 30 year timeframes before we would even start building airport and North Shore links in Auckland were just absurd. And as I've said before and the OECD has said as well this is a once in a generation opportunity to fill our boots with unusually cheap funding to pay for it.

But you don't have to take just my word for it. Here's the IMF's wording in this month's update to its flagship World Economic Outlook (p28, Chapter 1):

Investment in physical infrastructure: Empirical evidence from advanced economies suggests that, if done right, infrastructure investment brings both short- and long-term benefits: an increase in public investment of 1 percent of GDP can raise the level of output by 1½ percent over the medium term...After three decades of almost continuous decline, public investment in infrastructure and the stock of public capital as a share of output are near historic lows in advanced economies. Many countries could take advantage of the favorable funding environment [see? see?] to improve the quality of the existing infrastructure stock and implement new projects (see Chapter 3 of the October 2014 WEO). Countries with deficits in infrastructure include Australia, Canada, Germany, the United Kingdom, and the United States [and us, as I pointed out for example here]. Priorities vary but, in most cases, include upgrading surface transportation and improving infrastructure technologies (in high-speed rail, ports, telecommunications, broadband), as well as green investments.

Fire up the JCBs.

Will the RBNZ hold off till late '19?

The inflation numbers we got this morning - headline annual rate 1.9%, with tradables inflation running at 1.0% and non-tradables at 2.6% - were a tad higher than expected.

The numbers are always hard to interpret. On the tradables side we get inflation dealt to us by developments in the rest of the world and  movements in the exchange rate, neither of which we can do much about. On the non-tradables side - the domestically generated inflation which is all the RBNZ can influence over the longer haul - the numbers are distorted by what's going on in the housing markets, which are currently running hot.

But at least we can strip out the housing element in various ways and see what's happening ex housing. Here's the picture (I've adjusted the data mechanically to take out the GST-related blip in 2010-11). The data starting points are driven by when they start on Stats' Infoshare database.

It doesn't really matter which ex-housing measure of domestic inflation you look at: they've all risen to a little over 2%.

So the question I'm left asking is: will the RBNZ really leave monetary policy unchanged till late 2019, as is currently its stated intention? Domestic inflation (ex housing) is already at the mid-point of the Bank's target, and tradables inflation could also easily be running at 2.0% or more: the IMF's latest World Economic Outlook has inflation in the developed world at 1.7% next year and inflation in emerging/developing economies at 4.4%. If you weight those up to get a world inflation rate, it comes out around 3.3%. Call it  3%: then if the NZ$ stays where it is, and domestic inflation (even after taking out the hot housing bits) stays at say 2.25%, then you get overall inflation running at around 2.5%.

That doesn't sound to me like a great case for leaving monetary policy on an accommodative setting all the way out to late 2019. The financial futures market doesn't think so either: 90 day bank bill futures, for example, are pricing in a 0.25% increase by the end of next year, a full year before the RBNZ says it will increase rates. Some folks think it could be earlier again: the BNZ's latest forecasts, earlier this month, see the RBNZ hiking the official cash by 0.25% in the September 2018 quarter.

Any sane central bank won't react to one quarter's numbers, and everyone - central bankers and private sector forecasters, and that includes me being as wrong as anyone else - have all been repeatedly blindsided by inflation not appearing like it was supposed to. But on the latest data I think I'd be sketching in the prospect of higher interest rates a good deal earlier than the Bank has been signalling.

How many is 'enough'?

The ACCC has been doing a fine bit of reporting on the state of competition in various petrol markets around Australia. Its latest one, out last week, is on Brisbane, where it found that motorists were paying roughly 3.3 Aussie cents a litre over the odds compared to the other large cities in Australia, which adds up to A$50 million extracted from drivers' pockets over a full year.

The reason? Less intense competition in Brisbane. Which looks a bit odd at first, when you compare the industry structure in Brisbane with that in Sydney. They don't look that different - in terms of numbers of petrol stations, both cities have the oil companies (BP and Caltex in Brisbane), supermarket outlets, independent chains, and small independents. We can only salivate in contemplation of the degree of choice both cities have compared to us (and in particular compared to our South Island).

But it's a bit more apparent than real. In Brisbane the ACCC found that the supermarkets and the independents don't always price that sharply ('RULP' in the graph is regular unleaded petrol). Coles by the way looks a bit worse than it really is, as the prices measured are pump prices, before using "shopper dockets" (those discounts you get with your supermarket receipt). I'd guess a big proportion of the drivers who belly up to Coles will be armed with the discount.

In Sydney, though, the independents go for it.

Part of the difference may be down to the pricing strategies the Brisbane companies have happened to follow. But part of it is down to the greater leeway the Brisbane players have to follow less aggressive pricing plans: there's been a degree of consolidation over the past ten years, with two independents merged into one, and 7-Eleven buying Mobil's stations.

This is sobering stuff for us on this side of the Tasman. If two supermarkets, two oil companies, five independent chains and a tail of small outlets aren't enough to constrain petrol prices in Brisbane to what's on offer in the other Aussie cities, what hope have motorists in New Zealand got of getting a really sharp price from the three big players (BP, Mobil, Z) and the regionally limited price discipline that Gull imposes?

The more time has gone by - and in the light of MBIE's petrol study (links to study here, my comments here and here) - the more I'm leaning towards the view that Dr Jill Walker, the dissenter in the Commerce Commission's approval of the Z/Chevron merger - had the right end of the stick. She said (para 40 of her dissent):

An independent Chevron also provides an ‘option value’ for increased competition in the future without the merger. Without the merger, Chevron’s assets would remain independent of Z. Importantly, this involves not simply retail assets, but an entire supply chain. Effective competition in retail fuel markets tends to be driven by retailers who are backed by their own independent supply chain, such as Gull in parts of the North Island...I am not satisfied that in the future without the merger, there is not a real chance that Chevron’s assets could be used to disrupt retail coordination and increase competition. With the merger, any real chance is permanently removed.

What the Brisbane report shows, in my view, is that you need to facilitate every bit of competition you possibly can: you need a lot of parties to get the sort of outcomes Sydney and Melbourne motorists enjoy. And the option value of one extra aggressive competitor is very high indeed when you're starting (as we are) from a highly concentrated starting point.

The other thing the Brisbane report shows - and I'm not apologising for banging on about it yet again - is what a useful thing these "market studies" are. Our Commerce Commission still hasn't got the ability to do what the ACCC has just done, and does anyone really think the ACCC report was a bad idea, or that the Commerce Commission wouldn't have done just as good a job?

Little birdies tell me that the legislation to give the Commission some limited market studies powers is getting closer and that a petrol study could well be first out of the blocks. There's even a chance that the Commission will, in time, be let do studies off its own bat instead of waiting for Ministerial direction.

Good.

They're like buses...

...no sooner did we get a big chunk of reporting on the electricity markets on Tuesday from the Electricity Authority (which I posted about), but on Wednesday we got the latest information disclosure data on the electricity lines businesses from the Commerce Commission. Here's the (brief) media release and here's the entrance point to the data, which cover the period ending March '17.

It's an odd industry sector. Mostly, in a small economy like ours, we risk having heavily concentrated sectors with limited numbers of players, but we've also some sectors where you wonder how we go on supporting the numbers we do, and, you'd suspect, with the accompanying issues of inefficiencies of scale. The electricity lines game is one that looks like it could do with quite a bit of rationalisation: twenty-nine lines companies for 4.8 million people looks over the top, especially as some are very tiny indeed in terms of customer numbers.

Buller Electricity, the smallest, has only 4,579 customer connections: for perspective, the median lines company has some 185,000 connections, and the biggest (Vector) has over 550,000. There's no reason barring historical accident why Buller should be a standalone entity, and why it hasn't been folded into neighbouring Westpower long ago is a mystery to me. It wouldn't be a massive efficiency - Westpower itself has only 13,448 connections - but it would be a start. Similarly for the rest of the minnows - Scanpower in Dannevirke (6,690 connections), Centralines in Waipukurau (8,496), Nelson Electricity (9,203), and Network Waitaki in Oamaru (12,710).

But we are where we are, as they say, and if you want to find out pretty much anything about the current 29, the comprehensive Commerce Commission data is where to go.

There are terrific snapshots of each one on its own if you click on the map of the lines' networks and follow the 'Download doc' link provided for each network. Here for random example is just a small part of the data on the Orion network showing the state of its lines and cables assets, and there's lots more on its operating and financial performance.

The data are not, however, the most accessible thing you'll ever use if you want to make comparisons. The summary report on each company does give some ranking information on how it compares with the others (Orion for example ranks 3rd on a lot of metrics), but if you take the view - as I do - that a good deal of the value from information disclosure regimes comes from looking at relative performance, you'll likely want more than the single-company summaries will give you.

The good news is that the information is there, but it's not immediately obvious where*. So just to make the whole thing easier, I've done it for you - here's a 'Handy ELB ranking guide', where I've also done a bit of colouring (price/quality regulated companies in red, information disclosure companies in black) plus fixed the 'return on investment' line so it better displays the return.

The data are a great starting point for analysis, and could answer any number of interesting questions: are there, for example, any systematic differences between the consumer-owned companies (subject only to information disclosure) and the rest of them (subject to price/quality control)? And what about those efficiencies of scale that I've implicitly assumed earlier? Research economists are always on the look-out for that treasure-trove of as-yet-untilled data: here's a prime candidate.

Whether anyone is, in fact, making good analytical use of this information is another question. It would probably help - and I understand the Commission has it in its plans - to put out some version of this data with interpretative commentary for a general audience, as the Telco Commissioner for example does with annual reports on the telco sector (they're here if you haven't seen them). Information disclosure as a regulatory option has its uses, and maybe those most keenly interested in the sector won't need the info spoon-fed for them, but for the bulk of the intelligent public this very useful data could do with a bit more PR assistance.


*If you go to the network map and scroll down, under 'Documents' you'll see there's a link to a spreadsheet, 'Performance summaries for electricity distributors - Year to 31 March 2017'.  Go to the 'One-pager' sheet of the spreadsheet. Top left, just under the 'Clipboard' command, there's an input box with a dropdown arrow: currently it says 'edb-name'.  Click on the down arrow, from the options that pop up pick 'r-rank', and hey presto - up come two sets of rankings of all 29, one showing the absolute values of the measures and the order showing each company's rank from 1 to 29.

More, please

The Electricity Authority has just come out with its latest annual report, and I was pleased to see it continues to report on the state of competition in the various electricity markets: competition, along with efficiency and reliability, are the three core things the Authority focuses on.

It's also great to see the Authority having a go at measuring whether electricity markets have actually become more competitive or not. It's good that there are specifics like the success of the What's My Number campaign, but it's better again if you can assemble some hard or hardish data on the state of overall competitive play. You're never going to pin it down exactly but this Annual Report - and previous exercises which I posted about here and here - have given it a good go.

Here are a couple of the more interesting measures the Authority has tracked (they're down the back in Appendix A). The HHI concentration index for the residential retail market is going down - though it's still on the borderline (2500 or so) between "moderately concentrated" and "highly concentrated" as the US competition authorities would describe it - and the market shares of the top 1, 2 3 and 4 suppliers (the CR measures in the right hand panel) have been slowly dropping.

Here's the HHI for the generation market. It's far from a dramatic movement, but every little helps.

Here's something a bit more complex - the percentage of time a large generator has had the field to itself in a particular area: it's the only one around who can supply energy, and it has surplus energy to provide after meeting its own retail or other contractual demand. In the industry jargon it is the "net pivotal supplier", or in plain English it can hold the rest of us to ransom and ramp up prices. Again it's good news: it doesn't happen very often. There's a net pivotal supplier only 2% of the time.

Things like market shares however don't always tell you a lot: you could, for example, have vigorous competitors going at it hammer and tongs, with their marketing efforts cancelling each other out, so market shares don't move, or you could have cosy tacit collusion, and again market shares don't move. So the Authority has chucked in some behavioural data as well. Here's how often residential customers get approached to switch suppliers. Answer: more often.

Overall, the data show some modest to decent improvement in competition across many, though not all, metrics. Good stuff.

But I'll bet there's a question already on your mind. How come we're not seeing this sort of information coming out on other important markets?

Partly, of course, it's because most other sectors don't have a sectoral regulator. But partly it's because the Commerce Commission still remains hamstrung in its abilities to have a look. There is a proposal to let it do "market studies", but (as I said here) it's very tightly circumscribed and in any event is some considerable time away from being implemented, given the glacial pace of changes to our competition law.

Yet we know that we need to find out more about the sort of competitive choice consumers are getting in other industries beyond electricity (where the Authority is doing a fine job) and telecommunications (where the Telco Commissioner is also on the ball). We know, for example, that consumers face higher prices for petrol in areas where Gull isn't a competitor, but we only know that because MBIE was ordered to look into it as a one-off investigation.

Why aren't we getting the same level of pro-consumer inquiry in other markets?