Competition in the Netherlands; an analysis of the period 1993-2001

Harold Creusen, Bert Minne and Henry van der Wiel

No 136, CPB Document from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: Competition in the Dutch market sector as a whole probably slightly declined during 1993-2001. Within the market sector, a large variety in competition development exists. Competition changes have been rather small in many industries competition, but a considerable number of industries experienced a sharp rise or strong fall in competition. These findings are puzzling in light of regulatory reforms that have been implemented in the period observed. Yet, econometric analysis suggests that regulatory reforms could have intensified competition. However, strong growth of market demand has weakened competition and it counterbalanced to some extent the impact of regulatory reforms. If demand grows more rapidly than supply, then incumbent firms compete less aggressively. This should attract new competitors if entry barriers are low. Although entry has a positive effect on competition, its contribution has been negligible or even slightly negative. The analysis is based on two competition indicators. The model considerably explains the development of both indicators at the industry level. However, several determinants have statistically insignificant coefficients, particularly the estimated coefficients of entry and exit rates.

JEL-codes: D4 L1 L5 (search for similar items in EconPapers)
Date: 2006-12
New Economics Papers: this item is included in nep-com, nep-cse, nep-eec, nep-ent and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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