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Competition, productivity and prices in the euro area services sector

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  • Ad van Riet
  • Moreno Roma
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    Abstract

    This paper analyses the degree of competition in the euro area services sector and its effects on labour productivity and relative prices in that sector over the period 1980-2003. The importance of the euro area services sector has significantly increased over time; it now accounts for around 70% of the euro area’s total nominal value added and employment. Labour productivity growth across the euro area services industries appears to be characterised by a high degree of diversity and the level of services inflation is on average higher than aggregate inflation. Investigating several proxies of market competition for the non-financial business services, the paper finds that limited competition in services tends to hamper labour productivity growth in the services sector. Moreover, results tend to suggest that measures aimed at increasing services market competition may have a dampening impact on relative price changes in some services sectors and thus temporarily on aggregate inflation. JEL Classification:

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    Bibliographic Info

    Paper provided by European Central Bank in its series Occasional Paper Series with number 44.

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    Length: 139 pages
    Date of creation: Apr 2006
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    Handle: RePEc:ecb:ecbops:20060044

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    Cited by:
    1. Nepelski, Daniel, 2010. "Competition and Innovation: ICT- and non-ICT-enabled Product and Process Innovations," MPRA Paper 26243, University Library of Munich, Germany.
    2. Alexander W. Hoffmaister, 2006. "Barriers to Retail Competition and Prices," IMF Working Papers, International Monetary Fund 06/231, International Monetary Fund.
    3. Jochen Hartwig, 2008. "Has health capital formation cured ‘Baumol’s Disease’? – Panel Granger causality evidence for OECD countries," KOF Working papers, KOF Swiss Economic Institute, ETH Zurich 08-206, KOF Swiss Economic Institute, ETH Zurich.

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