Product Market Reform and Innovation in the EU

Rachel Griffith (), Rupert Harrison and Helen Simpson

No 5849, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 (search for similar items in EconPapers)
JEL-codes: L1 O31 O47 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec and nep-ino
Date: 2006-09
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