Since 1999, the Danish Competition Authority has used the aggregate price level as the key indicator of the state of competition in the Danish economy. The Danish Chamber of Commerce, Dansk Erhverv, has asked Copenhagen Economics to assess whether the aggregate Danish price level is a good key indicator for the state of competition in the Danish economy. We conclude that the aggregate price level is influenced by many factors and in practice it is impossible to isolate the price effect of competition. We recommend that the Danish Competition Authority discontinues its focus at the aggregate price level in Denmark and instead devotes more attention to competition investigation of specific markets. This will yield a more fruitful discussion about concrete actions that can improve the competition in Denmark.
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