Draft:Anti-competitive market distortion

Anti-Competitive Market Distortion (ACMD) refers to government policies that allow private interests artificial competitive advantages over their rivals, foreign or domestic, at the expense of consumer welfare. The term was initially coined by Shanker Singham and Alden Abbott in 2011.

Definition
According to Singham and Abbott, ACMD refers to any departure from the market economy's premise of merit-based competition. This departure may be brought about by policies, rules, or other measures that limit the preservation of property rights or discourage competition on a national or international scale. Economic growth might be adversely affected by these distortions.

Origin and development
Singham's initial study in his work began with A General Theory of Trade and Competition (2007). He showed two distinct viewpoints within the macroeconomy: one from the producers' perspective and another from the consumers'. In addition, he endorsed government measures that increase consumer advantages, especially through trade agreements, and argued that consumer welfare should be given priority in economic policy.

He highlighted three essential principles for modern economic growth: open trade, property rights protection, and competition. Singham explained that any meddling that upsets the balance between these fundamental components will harm consumer welfare. In general, he referred to these disturbances as "anti-competitive practices" (ACP).

Singham and Abbott initially presented the conceptual framework of ACMD in an academic publication in 2011. Anti-Competitive Market Distortion (ACMD), or ACMDs as in plural, was the term used to describe actions that restricted trade liberalization by distorting competition and not protecting property rights. These interventions were seen as obstacles to improving the welfare of consumers within and across national boundaries.

Classifications
Primarily, ACMDs fall into two categories: direct government limitations on competition and private-sector initiatives sponsored by governments that impact international trade. The SRB model further specifies six different types of ACMDs, which include:


 * Government laws, regulations, or practices that eliminate competition completely;
 * Government laws, regulations, or practices that lessen competition;
 * Laws or regulations that are applied differently among firms or regulatory exemptions given to some firms;
 * Distortions caused by state-owned enterprises (SOEs);
 * Action or inaction by competition agencies; and
 * Anti-competitive state aid or support.

Later, Singham, Rangan, Bradley, and Kiniry developed a more comprehensive system, the Distortion Index, published in 2016.

Application
Singham published a sample chapter in Plan A Plus that discusses state-owned enterprises, competition policies, market distortions, and ACMDs. Singham published models for a possible UK-US Free Trade Agreement (FTA) in cooperation with think tanks, followed by Trade, Competition, and Domestic Regulations. In addition, Singham, Rangan, Bradley, and Kiniry also researched ACMDs in India.

As a part of a November 2023 study by the UK's Growth Commission, a new version of the SRB model was used to show that per capita GDP could increase by 12.1% to 13.3%, 7.6% to 11.1%, and 6.5% to 11.1% over the time it would take to improve a country’s scores in the property rights and domestic and international competition areas  by one point respectively in the ACMD model.