Working Paper: CEPR ID: DP7470
Authors: Paolo Buccirossi; Lorenzo Ciari; Tomaso Duso; Giancarlo Spagnolo; Cristiana Vitale
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 as measured 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 set up 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.
Keywords: antitrust; competition policy; deterrence; institutions; productivity growth
JEL Codes: C23; K21; L4; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Competition Policy (L40) | TFP growth (O49) |
| Institutional features and antitrust activities (L49) | TFP growth (O49) |
| Competition Policy + Efficient legal systems (L49) | TFP growth (O49) |
| Competition Policy (L40) | Social welfare (I38) |