Is more competition conducive to the macroeconomic performance in the euro area?

Weyerstrass, KlausORCID: and Jaenicke, Johannes (2011) Is more competition conducive to the macroeconomic performance in the euro area? Empirica, 38 (3), pp. 351-380.

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One of the main goals of the European Union, laid down, inter alia, in the Lisbon Strategy and in the “Europe 2020” Strategy, is to raise employment. One important means of supporting the creation of new jobs is to increase competition. In this paper, it is shown that on average the mark-up, i.e. the deviation of prices from marginal cost in the euro area still exceeds the levels observed in the UK and in the US. After completion of the Single Market Programme in 1993, the mark-up has declined in the euro area and even more in the UK. Nevertheless, there is a strong cross-country variation between Member States, with a particularly high mark-up ratio found for Italy. Panel estimations show that total factor productivity growth, labour productivity growth and the labour market performance in the euro area could be improved by reducing the mark-up. This could be achieved by a proper institutional design. More competition could indeed improve the macroeconomic performance.

Item Type: Article in Academic Journal
Additional Information (public): This issue of Empirica is titled: "Special Issue: Facing the Crisis – New Challenges for Competition Policy Selected Papers from the 2010 Annual Meeting of the Austrian Economic Association".
Keywords: panel estimation, mark-up, labour market institutions, Euro area
Classification Codes (e.g. JEL): E24, J31, J51
Date Deposited: 22 Jul 2015 12:09
Last Modified: 05 Jul 2019 08:24
DOI: 10.1007/s10663-010-9161-0
ISSN: 0340-8744 (Print), 1573-6911 (Online)

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