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Does competition raise productivity through improving management quality?

  • Van Reenen, John

A classic question in industrial organization is whether competition raises productivity and if so, through what mechanism? I discuss recent empirical evidence from both large-scale databases and specific industries which suggests that tougher competition does indeed raise productivity and one of the main mechanisms is through improving management practices. To establish this, I report on new research seeking to quantify management. I relate this to theoretical perspectives on the economics of competition and management, arguing that management should be seen at least in part as a transferable technology. A range of recent econometric studies suggests that (i) competition increases management quality and (ii) improved management quality boosts productivity.

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Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 29 (2011)
Issue (Month): 3 (May)
Pages: 306-316

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Handle: RePEc:eee:indorg:v:29:y:2011:i:3:p:306-316
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505551

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