OECD Economics Department Working Papers

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.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

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Product Market Competition and Economic Performance in the United Kingdom

This paper assesses what role product market competition and regulatory reforms may have played in the performance of the British economy over the past decade. Competitive pressures appear to be relatively strong in the United Kingdom, with regulations inhibiting competition and barriers to trade amongst the lowest in the OECD. Nevertheless, there is scope for improvement and the recent overhaul of competition legislation should help to further promote competition. Much progress has been made in the professional services sector. Self-regulatory bodies are no longer exempt from competition legislation and professional bodies have undertaken a number of actions towards removing or easing restrictions that inhibit competition. In the retail sector, market power remains a problem and the competition authorities will need to remain vigilant. The government’s recent approach to planning has made new large scale entry very difficult, impeding competition and inhibiting entry. Industry regulators also need to remain vigilant in the electricity, gas and telecommunications sectors. Reforms in these sectors have led to increased productivity, though international comparisons suggest that there is scope for prices to fall. While recent steps by the government overcome the most serious weaknesses of the privatised rail system, continuing problems regarding incentives and responsibilities remain to be resolved.


Keywords: productivity and growth, network industries, competition, United Kingdom, regulatory policies, antitrust law, market structure
JEL: L43: Industrial Organization / Antitrust Issues and Policies / Legal Monopolies and Regulation or Deregulation; O51: Economic Development, Innovation, Technological Change, and Growth / Economywide Country Studies / Economywide Country Studies: U.S.; Canada; K23: Law and Economics / Regulation and Business Law / Regulated Industries and Administrative Law; L16: Industrial Organization / Market Structure, Firm Strategy, and Market Performance / Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices; L11: Industrial Organization / Market Structure, Firm Strategy, and Market Performance / Production, Pricing, and Market Structure; Size Distribution of Firms; K21: Law and Economics / Regulation and Business Law / Antitrust Law; L40: Industrial Organization / Antitrust Issues and Policies / Antitrust Issues and Policies: General
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