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Service Oligopolies and Australia's Economy‐Wide Performance*
Author(s) -
Tyers Rod
Publication year - 2015
Publication title -
australian economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.308
H-Index - 29
eISSN - 1467-8462
pISSN - 0004-9018
DOI - 10.1111/1467-8462.12126
Subject(s) - oligopoly , economics , gross domestic product , service (business) , industrial organization , product (mathematics) , service economy , tertiary sector of the economy , competition (biology) , business , economy , market economy , microeconomics , macroeconomics , cournot competition , ecology , geometry , mathematics , biology
Australia's services industries now contribute almost four‐fifths of gross domestic product. The microeconomic reforms of the 1990s left behind numerous regulated private service oligopolies that contribute one‐quarter. Using an economy‐wide modelling approach that represents service oligopoly behaviour explicitly, the extent of sectoral interactions and the potential economy‐wide gains from price cap regulation are assessed. Non‐linear interaction between oligopoly industries is shown to support economy‐wide over sectoral analysis. Moreover, the results from the economy‐wide modelling suggest that the cost of unabated oligopoly distortions would amount to one‐third of Australia's gross domestic product.