Revitalising EU growth: The power of competitive markets

Andrea Camilli, Michele Catalano, Claudio Colacurcio, Adriaan Dierx and Fabienne Ilzkovitz

Journal of Policy Modeling, 2025, vol. 47, issue 5, 1056-1075

Abstract: The observed decline in competition in the EU has come at a cost. Simulations of the macroeconomic effects of competition using dynamic stochastic general equilibrium models show that the increase in markups observed in the EU since 2000 may have reduced EU GDP by up to 5–7 % compared to the counterfactual. However, without the European Commission’s competition interventions taken over the last ten years, this impact might have been larger by almost one quarter. The paper also suggests that targeted policy measures limiting the market power of high markup companies and tackling the lack of competition in EU lagging countries, each promise to increase GDP by around 4 % after 10 years, counterbalancing the loss due to the increase in EU markups since 2000.

Keywords: European Union; General Equilibrium Models; Competition (search for similar items in EconPapers)
JEL-codes: D24 D43 E27 E37 F47 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:47:y:2025:i:5:p:1056-1075

DOI: 10.1016/j.jpolmod.2025.05.001

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