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Product market reforms and productivity: a review of the theoretical and empirical literature on the transmission channels

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  • Gaetan Nicodeme
  • Jacques-Bernard Sauner-Leroy

Abstract

Product market reforms are structural reforms of microeconomic type that aim at improving the functioning of product markets by increasing competition amongst producers of goods and services. Theoretical models suggest that regulation and reforms which liberalise or improve the functioning of markets can positively affect productivity through three different channels, namely a reallocation of scarce resources (allocative efficiency), an improvement in the utilisation of the production factors by firms (productive efficiency) and an incentive for firms to innovate to move to the modern technology frontier (dynamic efficiency). This paper reviews the theoretical and empirical literature on these three channels.

Suggested Citation

  • Gaetan Nicodeme & Jacques-Bernard Sauner-Leroy, 2004. "Product market reforms and productivity: a review of the theoretical and empirical literature on the transmission channels," European Economy - Economic Papers 2008 - 2015 218, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:ecopap:0218
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    Cited by:

    1. Anderton, Robert & Di Lupidio, Benedetta & Jarmulska, Barbara, 2020. "The impact of product market regulation on productivity through firm churning: Evidence from European countries," Economic Modelling, Elsevier, vol. 91(C), pages 487-501.
    2. Chari, Murali D.R. & Banalieva, Elitsa R., 2015. "How do pro-market reforms impact firm profitability? The case of India under reform," Journal of World Business, Elsevier, vol. 50(2), pages 357-367.
    3. Chiara Tomasi & Fabio Pieri & Valentina Cecco, 2023. "Red tape and industry dynamics: a cross-country analysis," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(2), pages 283-320, June.
    4. Michele Cincera, 2004. "Impact of market entry and exit on EU productivity and growth performance," ULB Institutional Repository 2013/921, ULB -- Universite Libre de Bruxelles.
    5. Konté,Maty & Kouame,Wilfried Anicet Kouakou & Mensah,Emmanuel Buadi, 2021. "Structural Reforms and Productivity Growth in Developing Countries : Intra- or Inter-Reallocation Channel ?," Policy Research Working Paper Series 9733, The World Bank.
    6. Papaspyrou, Theodoros S., 2007. "Economic policy in EMU: community framework and national strategies - focus on Greece," LSE Research Online Documents on Economics 5631, London School of Economics and Political Science, LSE Library.
    7. repec:bla:jcmkts:v:47:y:2009:i::p:693-717 is not listed on IDEAS
    8. Valkonen, Laura, 2006. "Deregulation as a Means to Increase Competition and Productivity," Discussion Papers 1014, The Research Institute of the Finnish Economy.
    9. Francisco Javier Escribá-Pérez & María José Murgui-García, 2018. "Technology catching-up and regulation in European regions," Journal of Productivity Analysis, Springer, vol. 49(1), pages 95-109, February.
    10. Hans Pitlik & Margit Schratzenstaller, 2011. "Growth Implications of Structure and Size of Public Sectors," WIFO Working Papers 404, WIFO.
    11. Maty Konte & Wilfried A Kouamé & Emmanuel B Mensah, 2022. "Structural Reforms and Labor Productivity Growth in Developing Countries: Intra or Inter-Reallocation Channel?," The World Bank Economic Review, World Bank, vol. 36(3), pages 646-669.
    12. Andre Jungmittag, 2018. "The Direct and Indirect Effects of Product Market Regulations in the Retail Trade Sector," JRC Research Reports JRC112222, Joint Research Centre.
    13. Bianka Dettmer, 2012. "The European Union's service directive: Contrasting ex ante estimates with empirical evidence," Jena Economics Research Papers 2012-019, Friedrich-Schiller-University Jena.
    14. Igna, Ioana A. & Rincon-Aznar, Ana & Venturini, Francesco, 2019. "Upstream regulation, factor demand and productivity: Cross-industry differences in OECD countries, 1975–2007," Information Economics and Policy, Elsevier, vol. 49(C).
    15. MARSCHINSKI Robert & DE AMORES HERNANDEZ Antonio & AMOROSO Sara & BAUER Peter & CARDANI Roberta & CSEFALVAY Zoltan & GENTY Aurelien & GKOTSIS Petros & GREGORI Wildmer & GRASSANO Nicola & HERNANDEZ GUE, 2021. "EU competitiveness: recent trends, drivers, and links to economic policy: A Synthesis Report," JRC Research Reports JRC123232, Joint Research Centre.
    16. Edquist, Harald & Henrekson, Magnus, 2013. "Product Market Reforms and Incentives to Innovate in Sweden," Working Paper Series 986, Research Institute of Industrial Economics.
    17. Iuliana-Tania ZLATCU & Roxana CLODNITCHI, 2018. "The Impact of Competition on Productivity. Theory and Evidence," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 19(4), pages 410-421, October.

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    More about this item

    Keywords

    product market reforms; competition; productivity; efficiency; Nicodeme; Sauner-Leroy;
    All these keywords.

    JEL classification:

    • O - Economic Development, Innovation, Technological Change, and Growth
    • P - Political Economy and Comparative Economic Systems

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