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Short-run effects of product markets’ deregulation: a more productive, more efficient and more resilient economy?

Author

Listed:
  • Ana Gouveia

    (GPEARI - Research and Economic Policy Division)

  • Sílvia Santos
  • Gustavo Monteiro

Abstract

This paper assesses the short-term impact of product market deregulation in upstream sectors on the productivity growth of firms in downstream sectors (i.e. those firms using the output of the reformed sectors as inputs in their production process). Relying on a firm level database for the period 2004-2014 covering all Portuguese firms, we show that the most productive firms - those at the sectoral technological frontier - grasp short-run benefits from these reforms, which are then spread to the other existing firms via spillover mechanisms. In addition, reforms potentiate the exit of the least productive firms, improving the resource allocation in the economy. Finally, we show that the adoption of product market reforms in upstream sectors leads to a more resilient economy, better equipped to face adverse shocks.

Suggested Citation

  • Ana Gouveia & Sílvia Santos & Gustavo Monteiro, 2017. "Short-run effects of product markets’ deregulation: a more productive, more efficient and more resilient economy?," GEE Papers 0069, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Mar 2017.
  • Handle: RePEc:mde:wpaper:0069
    as

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    File URL: http://www.gee.gov.pt/RePEc/WorkingPapers/GEE_PAPERS_69.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Product Market Reforms; Total Factor Productivity; Growth; Exit Rates; Resource Allocation; Resilience;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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