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EU Accession, Domestic Market Competition and Total Factor Productivity. Firm Level Evidence

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  • Klaus S. Friesenbichler

Abstract

In this paper we argue that changes in the EU membership status of the countries in Central and Eastern Europe led to less concentrated markets. This is due to the implementation of competition policy and other pro-competitive policies embedded in the Community Acquis, the body of European Union law. A regression analysis using data on 39,646 firms from six survey waves between 2002 and 2013 found EU membership to significantly increase the degree of domestic competition. While the effect of competition policy itself on market structures was statistically insignificant, the interaction between EU membership status and competition policy showed a strong and statistically significant competition enhancing effect. These findings were linked to a firm-level TFP analysis. Less concentrated markets were associated with higher productivity levels. This finding is robust after controlling for endogeneity issues. EU membership was only weakly associated with changes in TFP levels, but led to a decrease in the variance of the productivity measure across firms.

Suggested Citation

  • Klaus S. Friesenbichler, 2014. "EU Accession, Domestic Market Competition and Total Factor Productivity. Firm Level Evidence," WIFO Working Papers 492, WIFO.
    • Handle: RePEc:wfo:wpaper:y:2014:i:492
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    Cited by:

    1. Michael H. Böheim & Klaus S. Friesenbichler, 2016. "Exporting the Competition Policy Regime of the European Union: Success or Failure? Empirical Evidence for Acceding Countries," Journal of Common Market Studies, Wiley Blackwell, vol. 54(3), pages 569-582, May.
    2. Michael Böheim & Klaus S. Friesenbichler, 2014. "Does Accession to the European Union Foster Competition Policy? Country-level Evidence," WIFO Working Papers 491, WIFO.

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    Keywords

    competition policy; productivity; Community Acquis; EU; Enterprise Surveys; ECA; CEE;
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