Product market reforms and productivity growth. Theory and evidence

Author/s Elena Podrecca
Publishing Year 2013 Issue 2013/2
Language Italian Pages 32 P. 10-41 File size 823 KB
DOI 10.3280/ES2013-002002
DOI is like a bar code for intellectual property: to have more infomation click here

Below, you can see the article first page

If you want to buy this article in PDF format, you can do it, following the instructions to buy download credits

Article preview

FrancoAngeli is member of Publishers International Linking Association, Inc (PILA), a not-for-profit association which run the CrossRef service enabling links to and from online scholarly content.

This paper is a critical survey of the theoretical and empirical literature on the effects of product market reforms on long run growth. Growth theory and empirics teach us that, for advanced countries, the major determinants of productivity growth in the long run are research and development, human capital, innovation, technological diffusion. Economic theory suggests that economic reforms which affect competition in the product markets can certainly influence these growth drivers, but that the direction of the effects is ambiguous. Empirical evidence does not help to remove such ambiguity: both the literature on micro data and on macro data present inconclusive results. Advocating product market reforms on the basis of their alleged effects on productivity dynamics appears therefore unjustified, both based on theory and empirical evidence.

Keywords: Reforms, Growth, Competition, Productivity

  1. Acs Z.J. e Audretsch D.B. (1988). Innovation in large and small firms: an empirical analysis. American Economic Review, 78: 567-575.
  2. Agell J. (1999). On the benefits from rigid labour markets: norms, market failures, and social insurance. Economic Journal, 109: F143-F164.
  3. Aghion P., Bloom P.N., Blundell R., Griffith R. e Howitt P. (2001). Empirical estimates of the relationship between product market competition and innovation, mimeo.
  4. Aghion P. e Howitt P. (1992). A model of growth through creative destruction. Econometrica, 60: 323-351.
  5. Aghion P. e Howitt P. (1996). Research and development in the growth process. Journal of Economic Growth, 1: 49-73.
  6. Aghion P. e Howitt P. (1998). Endogenous Growth Theory. Cambridge and London: MIT Press.
  7. Aghion P., Bloom N., Blundell R., Griffith R. e Howitt P. (2005). Competition and Innovation: An Inverted U Relationship. Quarterly Journal of Economics, 120: 701-728, DOI: 10.1093/qje/120.2.701
  8. Aghion P., Blundell R., Griffith R., Howitt P. e Prantl S. (2009). The Effects of Entry on Incumbent Innovation Productivity. Review of Economics and Statistics, 91: 20-32, DOI: 10.1162/rest.91.1.20
  9. Aghion P., Dewatripont M. e Rey P. (1997). Corporate Governance, Competition Policy and Industrial Policy. European Economic Review, 41: 797-805.
  10. Aghion P., Dewatripont M. e Rey P. (1999). Competition, Financial Discipline and Growth. The Review of Economic Studies, 66: 825-852, DOI: 10.1111/1467-937X.00110
  11. Aghion P., Harris C., Howitt P. e Vickers J. (2001). Competition, imitation and growth with step by step innovation. Review of Economic Studies, 68: 467-492, DOI: 10.1111/1467-937X.00177
  12. Aghion P., Harris C. e Vickers J. (1995). Competition, Market Structure and Growth with Step-by-Step Innovation. Oxford, mimeo.
  13. Aghion P., Blundell R., Griffith R., Howitt P. e Prantl S. (2004). Entry and Productivity Growth: Evidence from Microlevel Panel Data. Journal of the European Economic Association, 2 (2-3): 265-276, DOI: 10.1162/154247604323067970
  14. Aghion P., Burgess R., Redding S. e Zilibotti F. (2003). The unequal effects of liberalization: theory and evidence from India. <>.
  15. Ahn S. (2002). Competition, Innovation and Productivity Growth: A Review of Theory and evidence. Oecd: Economics Department WP, 317, DOI: 10.1787/182144868160
  16. Ahn S. (2001). Firm dynamics and productivity growth: A review of evidence from Oecd countries. Oecd: Economics Department, WP 297, DOI: 10.1787/054842728775
  17. Allen C., Gasiorek M. e Smith A. (1998). European Single Market: How the Programme Has Fostered Competition. Economic Policy, 27: 441-486.
  18. Badinger H. (2007). Has the EU Single Market Programme Fostered Competition? Testing for a Decrease in Mark-up Ratios in EU Industries. Oxford Bulletin of Economics and Statistics, 69: 497-519, DOI: 10.1111/j.14680084.2007.00447.x
  19. Baily M.N. (1993). Competition, regulation, and efficiency in service industries. Brookings Papers on Economics Activity, Microeconomics: 71-130.
  20. Baily M.N. e Gersbach H. (1995). Efficiency in manufacturing and the need for global competition. Brookings Papers on Economic Activity, Microeconomics: 307-358.
  21. Baltagi B.H., Griffin J.M. e Rich D.P. (1995). Airline deregulation: The cost pieces of the puzzles. International Economic Review, 36: 245-260.
  22. Bassanetti A., Torrini R. e Zollino F. (2010). Changing institutions in the European market: the impact on mark-ups and rents allocation. Banca d’Italia, Temi di discussione, 781.
  23. Blundell R., Griffith R. e Van Reenen J. (1999). Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms. Review of Economic Studies, 66: 529-554.
  24. Bottasso A. e Sembenelli A. (2001). Market power, productivity and the EU single market program: evidence from a panel of Italian firms. European Economic Review, 45: 167-186, DOI: 10.1016/S0014-2921(99)00070-7
  25. Brandt N. (2004). Business dynamics, regulation and performance. Oecd Science, Technology and Industry WP. 2004/03. Oecd Publishing, DOI: 10.1787/573033480640
  26. Buigues P., Ilzkovitz F. e Lebrun J.F. (1990). The impact of the internal market by industrial sector: the challenge for member states. European Economy, special issue.
  27. Card D. e Freeman R.B. (2002). What have two decades of British economic reforms delivered?. NBER WP, 8801. http://w R&S pers/w8801.
  28. Carter C. e Williams B. (1959). Investment in Innovation. Oxford: OUP.
  29. Caves R. (1992). Industrial Efficiency in Six Nations. Cambrige: MIT Press.
  30. Caves R. e Barton D. (1990). Efficiency in US Manufacturing Industries. Cambridge: MIT Press.
  31. Cincera M. e O. Galgau (2005). Impact of market entry and exit rates on EU productivity and growth performance. European Commission Economic Papers, 222.
  32. Cohen W.M. e Levin R. (1989). Empirical studies of innovation and market structure. In Schumalensee R. e Willig R. D., a cura di. Handbook of Industrial Organization. Vol. II. Amsterdam: North Holland.
  33. Commissione Europea (1996). European Commission, Economic evaluation of the internal market. European Economy, Reports and Studies, 4.
  34. Criscuolo C., Haskel J. e Martin R. (2004). Import competition, productivity, and restructuring in UK manufacturing. Oxford Review of Economic Policy, 20: 393-408, DOI: 10.1093/oxrep/grh023
  35. Dasgupta P. e Stiglitz J. (1988). Industrial structure and the nature of innovative activity. Economic Journal, 90: 266-293.
  36. Disney R.F., Haskel J. e Heden Y. (2003). Restructuring and productivity growth in UK manufacturing. Economic Journal, 116: 666-694, DOI: 10.1111/1468-0297.t01-1-00145
  37. Dutz M. e Hayri A. (1999). Does more intense competition lead to higher growth?. CEPR, Discussion Paper, 2249.
  38. Faini R., Haskel J., Barba Navaretti G., Scarpa C. e Wey C. (2006). Contrasting Europe’s decline: do product market reforms help? In: Boeri T., Castanheira M., Faini R. e V. Galasso, a cura di. Structural reforms without prejudices, New York: Oxford University Press.
  39. Foster L., Haltiwanger J.C. e Krizan C.J. (2001). Aggregate Productivity Growth. Lessons from Microeconomic Evidence. In: Hulten C.R., Dean E.R. e Harper M.J. (2001). New Developments in Productivity Analysis. National Bureau of Economic Research Studies in Income and Wealth. Chicago: University of Chicago Press.
  40. Foster L., Haltiwanger J.C. e Krizan C.J. (2002). The Link Between Aggregate and Micro Productivity Growth: Evidence from Retail Trade. NBER WP, 9120.<>.
  41. Gans S.J., Hsu D.H. e Stern S. (2000). When does start-up innovation spur the gale of creative destruction?. NBER WP, 7851.<>.
  42. Geroski P. (1990). Innovation, Technical Opportunity and Market Structure. Oxford Economic Papers, 42: 586-602.
  43. Gerosky P. e Pomroy R. (1990). Innovation and the evolution of market structure. Journal of Industrial Economics, 38: 299-314.
  44. Gørgens T., Paldam M. e Würtz A. (2003). How does public regulation affect growth? Ahrus University Dept. of Economics WP, 14-2003.
  45. Gort M. e Sung N. (1999). Competition and productivity growth. The case of the US telephone industry. Economic Inquiry, 37: 678-691, DOI: 10.1111/j.1465-7295.1999.tb01456.x
  46. Green A. e Mayes D. (1991). Technical Efficiency in Manufacturing Industries. Economic Journal, 101: 523-538.
  47. Greer D. (1971). Advertising and market concentration. Southern Economic Journal, 38:19-32.
  48. Griffith R. e Harrison R. (2004). The link between product market reform and macro-economic performance. European Commission Economic Papers, 209.
  49. Griffith R., Harrison R. e Simpson H. (2010). Product Market Reforms and Innovation in the EU. Scandinavian Journal of Economics, 112: 389-415, DOI: 10.1111/j.1467-9442.2010.01602.x
  50. Grossman G. e Helpman H. (1991). Innovation and growth in the global economy. Cambridge: MIT Press.
  51. Hall R.E. (1988). The relationship between price and marginal cost in U.S. industry. Journal of Political Economy, 96: 921-47.
  52. Hall R.E. (1990). Invariance properties of Solow’s productivity residual. In P. Diamond, a cura di. Growth, Productivity, Unemployment. Cambridge: MIT Press.
  53. Hart O.D. (1983). The market as an incentive mechanism. Bell Journal of Economics, vol. 14: 336.382.
  54. Hart P.E. e Clarke R. (1980). Concentration in British industry, 1935-75: a study of the growth, causes and effects of concentration in British manufacturing industries. New York: Cambridge University Press.
  55. Haskel J. (1991). Imperfect Competition, Work Practices and Productivity Growth. Oxford Bulletin of Economics and Statistics, 53: 265-280.
  56. Johnson G. (1990). Work Rules, Featherbedding and Pareto-Optimal Union-Management Bargaining. Journal of Labour Economics, 8: S237-S259.
  57. Klapper L., Laeven L. e Rajan R. (2004). Business environment and firm entry: evidence from international data. NBER WP, 10380. <>.
  58. Klette T.J. (1999). Market power, scale economies and productivity: estimates from a panel of establishment data. Journal of Industrial Economics, 47: 451-76, DOI: 10.1111/1467-6451.00108
  59. Koedijk K. e Kremers J. (1996). Market opening, regulation and growth in Europe. Economic Policy, 23: 445-467.
  60. Kwoka J.E. (1993). The effects of divestiture, privatization, and competition on productivity in U.S. and U.K. telecommunications. Review of Industrial Organization, 8: 49-61.
  61. Levin R.C., Cohen W.M. e Mowery D. C. (1985). R&D appropriability, opportunity, and market structure: New evidence on some Schumpeterian hypotheses. American Economic Review Papers and Proceedings, 75: 20-24.
  62. Loyaza N.V., Oviedo A.M. e Serven L. (2005). Regulation and economic performance. WB Policy Research, WP, 3469.
  63. MacDonald J.M. (1994). Does import competition force efficient production? Review of Economics and Statistics, 76: 721-27.
  64. Martin S. (1979). Advertising, concentration, and profitability. Bell Journal of Economics, 10: 639-647.
  65. Melitz M.J. (2003). The impact of trade on intra-industry reallocations and aggregate industry productivity. Harvard University, mimeo.
  66. Metcalf D. (2002). Unions and Productivity, Financial Performance and Investment: International Evidence. CEP, Discussion Paper, 539.
  67. Meyer M.A. e Vickers J. (1997). Performance comparisons and dynamic incentives. Journal of Political Economy, 105: 547-581.
  68. Nickell S. (1996). Competition and Corporate Performance. Journal of Political Economy, 104: 724-746.
  69. Nickell S., Nicolitsas D. e Dryden N. (1997). What makes firms perform well. European Economic Review, 41: 783-796.
  70. Nicoletti G. e Scarpetta S. (2003). Regulation, Productivity and Growth. Oecd evidence. Economic Policy, 118: 9-72, DOI: 10.1111/1468-0327.00102
  71. Ocse (2003). Employment Outlook. Parigi: Oecd.
  72. Ocse (2013). Oecd economic surveys. Italy. Parigi: Oecd
  73. Oliveira Martins J., Scarpetta S. e Pilat D. (1996). Mark-Up Ratios in Manufacturing Industries. Estimates for Oecd countries. Oecd Economic Department WP, 162.
  74. Olley S. e Pakes A. (1996). The Dynamics of Productivity in the Telecommunications Industry. Econometrica, 64: 1263-1297.
  75. Podrecca E. (2013). Riforme del mercato dei prodotti, riforme del mercato del lavoro e crescita della produttività. Teoria ed evidenza empirica, mimeo.
  76. Pilat D. (1997). Regulation and performance in the distribution sector. Oecd Economic Department, WP, 180.
  77. Roeger W. (1995). Can imperfect competition explain the difference between primal and dual productivity measures? Estimates for U.S. manufacturing. Journal of Political Economy, 103: 316-30.
  78. Romer P.M. (1990). Endogenous technological change. Journal of Political Economy, 98:71-102.
  79. Rosen A. (1989). Bargaining over Effort. Centre for Labour Economics, London School of Economics, Discussion Paper, 351.
  80. Sauner-Leroy J.B. (2003). The Impact of the Implementation of the Single Market Programme on Productive Efficiency and on Mark-Ups in the European Union Manufacturing Industry. European Economy, European Commission Directorate-General for Economic and Financial Affairs. Economic Papers, 192.
  81. Scherer F.M. (1967). Market structure and the employment of scientists and engineers. American Economic Review, 57: 524-31.
  82. Scherer F.M. (1980). Industrial market structure and economic performance, II. Chicago: Rand-McNally.
  83. Schiantarelli F. (2005). Product Market Regulation and Macroeconomic Performance: A Review of Cross Country Evidence. IZA, Discussion Paper, 1791.
  84. Schumpeter J.A. (1942). Capitalism, Socialism and Democracy. New York: Harper and Row.
  85. Scott J.T. (1978). Non price competition in banking markets. Southern Economic Journal, 44: 594-605.
  86. Scott J.T. (1984). Firm vs. industry variability in R&D intensity. In Z. Griliches, a cura di. R&D, Patents, and Productivity. Chicago and London: University of Chicago Press.
  87. Scharfstein D. (1988). Product-market competition and managerial slack. Rand Journal of Economics, 19: 47-55.
  88. Strickland A.D. e Weiss L.W. (1976). Advertising, concentration, and price-cost margins. Journal of Political Economy, 84: 1109-1122.
  89. Vickers J. (1995). Concepts of competition. Oxford Economic Papers, 47: 1-23.
  90. Winston C. (1993). Economic deregulation: Days of reckoning for microeconomists. Journal of Economic Literature, 31: 1263-89.
  91. Wragg R. e Robertson J. (1978). Post War Trends in Employment, Productivity, Output, Labour Costs and Prices by Industry in the UK. Department of Employment Research, Paper, 3. London: HMSO.

Elena Podrecca, Riforme del mercato dei prodotti e crescita della produttività. Teoria ed evidenza empirica in "ECONOMIA E SOCIETÀ REGIONALE " 2/2013, pp 10-41, DOI: 10.3280/ES2013-002002