EU Accession, Domestic Market Competition and Total Factor Productivity. Firm Level Evidence
WIFO Working Papers, 2014, (492), 40 Seiten
Online seit: 18.12.2014 0:00
In this paper we argue that changes in the EU membership status of the countries in Central and Eastern Europe led to less concentrated markets. This is due to the implementation of competition policy and other pro-competitive policies embedded in the Community Acquis, the body of European Union law. A regression analysis using data on 39,646 firms from six survey waves between 2002 and 2013 found EU membership to significantly increase the degree of domestic competition. While the effect of competition policy itself on market structures was statistically insignificant, the interaction between EU membership status and competition policy showed a strong and statistically significant competition enhancing effect. These findings were linked to a firm-level TFP analysis. Less concentrated markets were associated with higher productivity levels. This finding is robust after controlling for endogeneity issues. EU membership was only weakly associated with changes in TFP levels, but led to a decrease in the variance of the productivity measure across firms.
Forschungsbereich:Industrieökonomie, Innovation und internationaler Wettbewerb
Sprache:Englisch

Verwandte Einträge

This paper argues that the accession to the European Union improves the quality of competition policy via the implementation of pro-competitive policies, especially antitrust and competition policies, embedded in the Community Acquis. We assess this conjecture empirically for the (former) transition economies of Central and Eastern Europe, using member countries as well as developing and developed countries in Europe and Central Asia as a control group. The data used is a macro-economic panel of 48 countries covering six 3-year periods between 1995 and 2012. We find that EU accession positively affected the quality of competition policies over and above an overall trend towards more market oriented policies. The improvement in competition policy was not reversed in a single country of the sample. The findings are robust when controlling for endogeneity issues. We also document a slow-down in policy reform efforts in the aftermath of the crisis, challenging previous literature which expects a reform enhancing effect of crisis.