Beyond the policy debate: How to quantify sustainability benefits in competition cases – Lessons learned from environmental economics
Beyond the policy debate: How to quantify sustainability benefits in competition cases – Lessons learned from environmental economics
The competition community is currently busy discussing the role of competition policy in supporting the Green Deal and other EU sustainability objectives. In this paper, we look beyond the policy debate and focus on the application of economic methodologies in quantifying sustainability benefits potentially stemming from an agreement, a merger, or state aid. We zoom in on the current rules to identify the boundaries of what could be the basis for incorporating sustainability in such cases before presenting well-established tools and methodologies from environmental economics that can be used in the quantification of sustainability. As with any quantitative assessment, there is a trade-off between accuracy and cost, and the methodological choices should be based on the circumstances of each case.
The main conclusions of our study are
Consumers’ willingness-to-pay is a well-established solution to quantify the monetary value of sustainability benefits.
It will be important to determine the appropriate welfare function and time horizon in which the benefits occur.
Environmental economics offers a large toolbox to quantify sustainability, filled with stated and revealed preference approaches, benefit transfer approaches and valuation using shadow prices, such as CO2
The paper has also been published at Lexxion Publishers, see https://www.lexxion.eu/en/journals/core/.
