DP7470 Competition Policy and Productivity Growth: An Empirical Assessment
|Author(s):||Paolo Buccirossi, Lorenzo Ciari, Tomaso Duso, Giancarlo Spagnolo, Cristiana Vitale|
|Publication Date:||September 2009|
|Keyword(s):||Antitrust, Competition Policy, Deterrence, Institutions, Productivity Growth|
|JEL(s):||C23, K21, L4, O4|
|Programme Areas:||Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=7470|
This paper empirically investigates the effectiveness of competition policy by estimating its impact on Total Factor Productivity (TFP) growth for 22 industries in 12 OECD countries over the period 1995-2005. We find a robust positive and significant effect of competition policy as measured by newly created indexes. We provide several arguments and results based on instrumental variables estimators as well as non-linearities to support the claim that the established link can be interpreted in a causal way. At a disaggregated level, the effect on TFP growth is particularly strong for specific aspects of competition policy related to its institutional set up and antitrust activities (rather than merger control). The effect is strengthened by good legal systems, suggesting complementarities between competition policy and the efficiency of law enforcement institutions.