Product Market Reform and Innovation in the EU

32 Pages Posted: 16 Nov 2006

See all articles by Rachel Griffith

Rachel Griffith

Institute for Fiscal Studies (IFS); University of Manchester; Centre for Economic Policy Research (CEPR)

Rupert Harrison

Institute for Fiscal Studies (IFS)

Helen Simpson

CMPO; Institute for Fiscal Studies (IFS)

Multiple version iconThere are 2 versions of this paper

Date Written: September 2006

Abstract

European Union countries have implemented widespread reforms to product markets in order to stimulate competition, innovation and economic growth. We provide empirical evidence that the reforms carried out under the EU Single Market Programme (SMP) were associated with increased product market competition, as measured by a reduction in average profitability, and with a subsequent increase in innovation intensity and productivity growth for manufacturing sectors. In our analysis we exploit exogenous variation in the expected impact of the SMP across countries and industries to identify the effects of reforms on average profitability, and the effects of profitability on innovation and productivity growth.

Keywords: Competition, innovation, productivity growth

JEL Classification: L1, O31, O47

Suggested Citation

Griffith, Rachel and Harrison, Rupert and Simpson, Helen, Product Market Reform and Innovation in the EU (September 2006). CEPR Discussion Paper No. 5849. Available at SSRN: https://ssrn.com/abstract=945439

Rachel Griffith (Contact Author)

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London WC1E 7AE
United Kingdom
+44 20 7291 4800 (Phone)
+44 20 7323 4780 (Fax)

University of Manchester ( email )

Arthur Lewis Building
Oxford Road
Manchester, M13 9PL
United Kingdom

HOME PAGE: http://www.ifs.org.uk/people/profile?id=37

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Rupert Harrison

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Helen Simpson

CMPO ( email )

University of Bristol
2 Priory Road
Bristol, BS8 ITX
United Kingdom

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom
+44 20 7291 4800 (Phone)
+44 20 7323 4780 (Fax)

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