IDEAS home Printed from https://ideas.repec.org/p/wfo/wpaper/y2014i492.html
   My bibliography  Save this paper

EU Accession, Domestic Market Competition and Total Factor Productivity. Firm Level Evidence

Author

Listed:
  • Klaus Friesenbichler

Abstract

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.

Suggested Citation

  • Klaus Friesenbichler, 2014. "EU Accession, Domestic Market Competition and Total Factor Productivity. Firm Level Evidence," WIFO Working Papers 492, WIFO.
    • Handle: RePEc:wfo:wpaper:y:2014:i:492
    as

    Download full text from publisher

    File URL: https://www.wifo.ac.at/wwa/pubid/50884
    File Function: abstract
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Saul Estrin, 2002. "Competition and Corporate Governance in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 101-124, Winter.
    3. Paulo G. Correa & Ana M. Fernandes & Chris J. Uregian, 2010. "Technology Adoption and the Investment Climate: Firm-Level Evidence for Eastern Europe and Central Asia," The World Bank Economic Review, World Bank, vol. 24(1), pages 121-147, January.
    4. Simeon Djankov & Peter Murrell, 2002. "Enterprise Restructuring in Transition: A Quantitative Survey," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 739-792, September.
    5. Sims,Christopher A. (ed.), 1994. "Advances in Econometrics," Cambridge Books, Cambridge University Press, number 9780521444606, January.
    6. Kee, Hiau Looi & Hoekman, Bernard, 2007. "Imports, entry and competition law as market disciplines," European Economic Review, Elsevier, vol. 51(4), pages 831-858, May.
    7. Timothy Dunne & Shawn D. Klimek & Mark J. Roberts & Daniel Yi Xu, 2013. "Entry, exit, and the determinants of market structure," RAND Journal of Economics, RAND Corporation, vol. 44(3), pages 462-487, September.
    8. John Antonakis & Samuel Bendahan & Philippe Jacquart & Rafael Lalive, 2010. "On making causal claims : A review and recommendations," Post-Print hal-02313119, HAL.
    9. Kornai, Janos, 1992. "The Postsocialist Transition and the State: Reflections in the Light of Hungarian Fiscal Problems," American Economic Review, American Economic Association, vol. 82(2), pages 1-21, May.
    10. Eric J. Bartelsman & John Haltiwanger & Stefano Scarpetta, 2004. "Microeconomic Evidence of Creative Destruction in Industrial and Developing Countries," Tinbergen Institute Discussion Papers 04-114/3, Tinbergen Institute.
    11. Raymond De Bondt & Jan Vandekerckhove, 2012. "Reflections on the Relation Between Competition and Innovation," Journal of Industry, Competition and Trade, Springer, vol. 12(1), pages 7-19, March.
    12. Paolo Buccirossi & Lorenzo Ciari & Tomaso Duso & Giancarlo Spagnolo & Cristiana Vitale, 2011. "Measuring The Deterrence Properties Of Competition Policy: The Competition Policy Indexes," Journal of Competition Law and Economics, Oxford University Press, vol. 7(1), pages 165-204.
    13. Michael W. Nicholson, 2008. "An Antitrust Law Index For Empirical Analysis Of International Competition Policy," Journal of Competition Law and Economics, Oxford University Press, vol. 4(4), pages 1009-1029.
    14. Sims,Christopher A. (ed.), 1994. "Advances in Econometrics," Cambridge Books, Cambridge University Press, number 9780521444590, January.
    15. Chang-Tai Hsieh & Peter J. Klenow, 2009. "Misallocation and Manufacturing TFP in China and India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(4), pages 1403-1448.
    16. Nicholas Economides, 1997. "The Economics of Networks," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 1(0), December.
    17. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 701-728.
    18. Joshua Angrist & Victor Chernozhukov & Iván Fernández-Val, 2006. "Quantile Regression under Misspecification, with an Application to the U.S. Wage Structure," Econometrica, Econometric Society, vol. 74(2), pages 539-563, March.
    19. Jens Hölscher & Johannes Stephan, 2004. "Competition Policy in Central Eastern Europe in the Light of EU Accession," Journal of Common Market Studies, Wiley Blackwell, vol. 42(2), pages 321-345, June.
    20. Paul J. Devereux, 2007. "Small-sample bias in synthetic cohort models of labor supply," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(4), pages 839-848.
    21. Eric Bartelsman & John Haltiwanger & Stefano Scarpetta, 2013. "Cross-Country Differences in Productivity: The Role of Allocation and Selection," American Economic Review, American Economic Association, vol. 103(1), pages 305-334, February.
    22. Munich, Daniel & Svejnar, Jan, 2007. "Unemployment in East and West Europe," Labour Economics, Elsevier, vol. 14(4), pages 681-694, August.
    23. Nickell, Stephen J, 1996. "Competition and Corporate Performance," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 724-746, August.
    24. Stephen Martin, 2012. "Market Structure and Market Performance," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 40(2), pages 87-108, March.
    25. Klaus Friesenbichler & Michael Böheim & Daphne Channa Laster, 2014. "Market Competition in Transition Economies: A Literature Review," WIFO Working Papers 477, WIFO.
    26. Estrin, Saul & Bevan, Alan, 2000. "The Determinants of Foreign Direct Investment in Transition Economies," CEPR Discussion Papers 2638, C.E.P.R. Discussion Papers.
    27. Pierre-Guillaume Méon & Laurent Weill, 2004. "Does better governance foster efficiency? An aggregate frontier analysis," Economics of Governance, Springer, vol. 6(1), pages 75-90, January.
    28. Alan A. Bevan & Saul Estrin, 2000. "The Determinants of Foreign Direct Investment in Transition Economies," William Davidson Institute Working Papers Series 342, William Davidson Institute at the University of Michigan.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Michael Böheim & Klaus Friesenbichler, 2014. "Does Accession to the European Union Foster Competition Policy? Country-level Evidence," WIFO Working Papers 491, WIFO.
    2. Michael H. Böheim & Klaus S. Friesenbichler, 2016. "Exporting the Competition Policy Regime of the European Union: Success or Failure? Empirical Evidence for Acceding Countries," Journal of Common Market Studies, Wiley Blackwell, vol. 54(3), pages 569-582, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Klaus S. Friesenbichler, 2020. "Does EU-accession affect domestic market structures and firm level productivity?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(2), pages 343-364, May.
    2. Klaus Friesenbichler & Michael Böheim & Daphne Channa Laster, 2014. "Market Competition in Transition Economies: A Literature Review," WIFO Working Papers 477, WIFO.
    3. Wifo, 2019. "WIFO-Monatsberichte, Heft 12/2019," WIFO Monatsberichte (monthly reports), WIFO, vol. 92(12), December.
    4. Klaus Friesenbichler & Michael Peneder, 2016. "Innovation, competition and productivity," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 24(3), pages 535-580, July.
    5. Klaus Friesenbichler & Michael Böheim & Michael Peneder, 2019. "Die Effekte der EU-Osterweiterung in den Beitrittsländern. Evidenz auf Länder- und auf Unternehmensebene," WIFO Monatsberichte (monthly reports), WIFO, vol. 92(12), pages 907-918, December.
    6. Klaus Friesenbichler & Michael Peneder, 2016. "Innovation, Competition and Productivity. Firm Level Evidence for Eastern Europe and Central Asia," WIFO Working Papers 516, WIFO.
    7. Aghion, Philippe & Akcigit, Ufuk & Howitt, Peter, 2014. "What Do We Learn From Schumpeterian Growth Theory?," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 0, pages 515-563, Elsevier.
    8. Michael H. Böheim & Klaus S. Friesenbichler, 2016. "Exporting the Competition Policy Regime of the European Union: Success or Failure? Empirical Evidence for Acceding Countries," Journal of Common Market Studies, Wiley Blackwell, vol. 54(3), pages 569-582, May.
    9. 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.
    10. Bena Jan & Ondko Peter & Vourvachaki Evangelia, 2011. "Productivity Gains from Services Liberalization in Europe," EERC Working Paper Series 11/15e, EERC Research Network, Russia and CIS.
    11. Florin Maican & Matilda Orth, 2017. "Productivity Dynamics and the Role of ‘Big-Box’ Entrants in Retailing," Journal of Industrial Economics, Wiley Blackwell, vol. 65(2), pages 397-438, June.
    12. Michael Böheim & Klaus Friesenbichler, 2014. "Does Accession to the European Union Foster Competition Policy? Country-level Evidence," WIFO Working Papers 491, WIFO.
    13. J. David Brown & Gustavo A. Crespi & Leonardo Iacovone & Luca Marcolin, 2018. "Decomposing firm-level productivity growth and assessing its determinants: evidence from the Americas," The Journal of Technology Transfer, Springer, vol. 43(6), pages 1571-1606, December.
    14. Clarke, George R. G., 2005. "Do government policies that promote competition encourage or discourage new product and process development in low and middle-income countries?," Policy Research Working Paper Series 3471, The World Bank.
    15. Kluge, Jan & Lappoehn, Sarah & Plank, Kerstin, 2020. "The Determinants of Economic Competitiveness," IHS Working Paper Series 24, Institute for Advanced Studies.
    16. Khalid Sekkat, 2009. "Does competition improve productivity in developing countries?," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 12(2), pages 145-162.
    17. repec:hal:wpspec:info:hdl:2441/5rkqqmvrn4tl22s9mc4b6ga2g is not listed on IDEAS
    18. Yi-Ling Cheng & Juin-Jen Chang, 2017. "The Quality of Intermediate Goods: Growth and Welfare Implications," The Economic Record, The Economic Society of Australia, vol. 93(302), pages 434-447, September.
    19. Victor Chernozhukov & Iván Fernández‐Val & Blaise Melly, 2013. "Inference on Counterfactual Distributions," Econometrica, Econometric Society, vol. 81(6), pages 2205-2268, November.
    20. Manuel Arellano & Stéphane Bonhomme, 2017. "Quantile Selection Models With an Application to Understanding Changes in Wage Inequality," Econometrica, Econometric Society, vol. 85, pages 1-28, January.
    21. Tamberi, Massimo, 2020. "Productivity differentials along the development process: A “MESO” approach," Structural Change and Economic Dynamics, Elsevier, vol. 53(C), pages 99-107.

    More about this item

    Keywords

    CEE; Community Acquis; ECA; EU; Enterprise Surveys; competition policy; productivity;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wfo:wpaper:y:2014:i:492. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Florian Mayr (email available below). General contact details of provider: https://edirc.repec.org/data/wifooat.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.