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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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  • Gaëtan Nicodème
  • Jacques-Bernard Sauner-Leroy

Abstract

Product market reforms are microeconomic structural reforms that aim to improve 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 and discusses policy implications for the European Union. Copyright European Communities 2007

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  • Gaëtan Nicodème & Jacques-Bernard Sauner-Leroy, 2007. "Product Market Reforms and Productivity: A Review of the Theoretical and Empirical Literature on the Transmission Channels," Journal of Industry, Competition and Trade, Springer, vol. 7(1), pages 53-72, March.
    • Handle: RePEc:kap:jincot:v:7:y:2007:i:1:p:53-72
    DOI: 10.1007/s10842-006-0417-0
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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. Theodoros S. Papaspyrou, 2007. "Economic Policy in EMU: Community Framework and National Strategies – focus on Greece," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 04, Hellenic Observatory, LSE.
    3. 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.
    4. Andre Jungmittag, 2018. "The Direct and Indirect Effects of Product Market Regulations in the Retail Trade Sector," JRC Research Reports JRC112222, Joint Research Centre.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. 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.
    10. 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).
    11. Harald Badinger & Niklas Maydell, 2009. "Legal and Economic Issues in Completing the EU Internal Market for Services: An Interdisciplinary Perspective," Journal of Common Market Studies, Wiley Blackwell, vol. 47(4), pages 693-717, September.
    12. Valkonen, Laura, 2006. "Deregulation as a Means to Increase Competition and Productivity," Discussion Papers 1014, The Research Institute of the Finnish Economy.
    13. 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.
    14. 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.
    15. Edquist, Harald & Henrekson, Magnus, 2013. "Product Market Reforms and Incentives to Innovate in Sweden," Working Paper Series 986, Research Institute of Industrial Economics.
    16. 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.
    17. Hans Pitlik & Margit Schratzenstaller, 2011. "Growth Implications of Structure and Size of Public Sectors," WIFO Working Papers 404, WIFO.

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    More about this item

    Keywords

    product markets reforms; competition; productivity; efficiency; O12; O30; O40;
    All these keywords.

    JEL classification:

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

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