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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
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Do Product Market Regulations in Upstream Sectors Curb Productivity Growth?
Panel Data Evidence for OECD Countries
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- Renaud Bourlès1, Gilbert Cette2, Jimmy Lopez2, Jacques Mairesse3, Giuseppe Nicoletti4
- Author Affiliations
- 1: Ecole Centrale Marseille, France
- 2: Banque de France, France
- 3: CREST-ENSAE, France
- 4: OECD, France
- 16 July 2010
- Bibliographic information
Based on an endogenous growth model, we show that intermediate goods markets imperfections can curb incentives to improve productivity downstream. We confirm such prediction by estimating a model of multifactor productivity growth in which the effects of upstream competition vary with distance to frontier on a panel of 15 OECD countries and 20 sectors over 1985-2007. Competitive pressures are proxied with sectoral product market regulation data. We find evidence that anticompetitive upstream regulations have curbed MFP growth over the past 15 years, more strongly so for observations that are close to the productivity frontier.
- regulation, growth, productivity, competition, catching-up
- JEL Classification:
- C23: Mathematical and Quantitative Methods / Single Equation Models ; Single Variables / Panel Data Models ; Spatio-temporal Models
- L16: Industrial Organization / Market Structure, Firm Strategy, and Market Performance / Industrial Organization and Macroeconomics: Industrial Structure and Structural Change ; Industrial Price Indices
- L5: Industrial Organization / Regulation and Industrial Policy
- O43: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / Institutions and Growth
- O57: Economic Development, Innovation, Technological Change, and Growth / Economywide Country Studies / Comparative Studies of Countries