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Dutch retail trade on the rise? Relation between competition, innovation and productivity


  • Harold Creusen


  • Björn Vroomen


  • Henry van der Wiel


  • Fred Kuypers



The Dutch retail trade demonstrated a relatively meagre performance in terms of productivity (growth) during the 1990s, especially seen from an international perspective. This study analyses the productivity performance of the Dutch retail trade in more detail, and focuses on competition and innovation as two main drivers of productivity growth. More precisely, it takes the mutual relationship between competition, innovation and productivity explicitly into account. Between 1993 and 2002 changes in competition varied substantially within the retail trade. However, on average competition slightly declined. Furthermore, only a few firms in the Dutch retail trade innovate. Regression analysis reveals that both competition and innovation enhance productivity growth directly. Further, fiercer competition induces more innovation, and consequently also raises productivity indirectly via innovation.

Suggested Citation

  • Harold Creusen & Björn Vroomen & Henry van der Wiel & Fred Kuypers, 2006. "Dutch retail trade on the rise? Relation between competition, innovation and productivity," CPB Document 137, CPB Netherlands Bureau for Economic Policy Analysis.
  • Handle: RePEc:cpb:docmnt:137

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    References listed on IDEAS

    1. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 701-728.
    2. Giuseppe Nicoletti & Stefano Scarpetta & Olivier Boylaud, 2000. "Summary Indicators of Product Market Regulation with an Extension to Employment Protection Legislation," OECD Economics Department Working Papers 226, OECD Publishing.
    3. Robert J. Gordon, 2004. "Five Puzzles in the Behavior of Productivity, Investment, and Innovation," NBER Working Papers 10660, National Bureau of Economic Research, Inc.
    4. Nickell, Stephen J, 1996. "Competition and Corporate Performance," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 724-746, August.
    5. Olivier Boylaud, 2000. "Regulatory Reform in Road Freight and Retail Distribution," OECD Economics Department Working Papers 255, OECD Publishing.
    6. Rauf Gönenç & Maria Maher & Giuseppe Nicoletti, 2003. "The Implementation and the Effects of Regulatory Reform: Past Experience and Current Issues," OECD Economic Studies, OECD Publishing, vol. 2001(1), pages 11-98.
    7. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
    8. Boone, Jan, 2001. "Intensity of competition and the incentive to innovate," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 705-726, April.
    9. Erik Canton & Bert Minne & Ate Nieuwenhuis & Bert Smid & Marc van der Steeg, 2005. "Human capital, R&D, and competition in macroeconomic analysis," CPB Document 91, CPB Netherlands Bureau for Economic Policy Analysis.
    10. Aghion, Philippe & Harris, Christopher & Vickers, John, 1997. "Competition and growth with step-by-step innovation: An example," European Economic Review, Elsevier, vol. 41(3-5), pages 771-782, April.
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    Cited by:

    1. Chantal Kegels & Michael Peneder & Henry van der Wiel, 2012. "Productivity Performance in Three Small European Countries: Austria, Belgium and the Netherlands," Chapters,in: Industrial Productivity in Europe, chapter 5 Edward Elgar Publishing.
    2. Aldaba, Rafaelita M., 2012. "Trade Reforms, Competition, and Innovation in the Philippines," Discussion Papers DP 2012-06, Philippine Institute for Development Studies.
    3. Brouwer, E. & van der Wiel, H.P., 2010. "Competition and Innovation : Pushing Productivity Up or Down?," Discussion Paper 2010-52, Tilburg University, Center for Economic Research.
    4. Viktoria Kocsis & Victoria Shestalova & Henry van der Wiel & Nick Zubanov & Ruslan Lukach & Bert Minne, 2009. "Relation entry, exit and productivity: an overview of recent theoretical and empirical literature," CPB Document 180, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Polder, Michael & Veldhuizen, Erik & Bergen, Dirk van den & Pijll, Eugène van der, 2009. "Micro and macro indicators of competition: comparison and relation with productivity change," MPRA Paper 18898, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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