Friday, May 14, 2010
Posted by D. Daniel Sokol
Paolo Buccirossi (LEAR), Lorenzo Ciari (LEAR and EUI), Tomaso Duso (Humboldt University Berlin and WZB), Giancarlo Spagnolo (University of Rome Tor Vergata SITE, EIEF, CEPR), and Cristiana Vitale (LEAR) have an interesting paper on Competition Policy and Productivity Growth: An Empirical Assessment.
ABSTRACT: This paper empirically investigates the effectiveness of competition policy by estimating its impact on Total Factor Productivity (TFP) growth for 22 industries in 12 OECD countries over the period 1995-2005. We ﬁnd a robust positive and signiﬁcant effect of competition policy asmeasured by newly created indexes. We provide several arguments and results based on instrumental variables estimators as well as non-linearities to support the claim that the established link can be interpreted in a causal way. At a disaggregated level, the effect on TFP growth is particularly strong for speciﬁc aspects of competition policy related to its institutional setup and antitrust activities (rather than merger control). The effect is strengthened by good legal systems, suggesting complementarities between competition policy and the efﬁciency of law enforcement institutions.