1 / 16

Competition, Innovation, and Productivity in Dutch Retail: A Comprehensive Analysis

Explore the impact of competition on innovation and productivity in the Dutch retail sector from 1993 to 2002. Understand the complex interplay between competition, innovation, and productivity growth based on empirical data and models. Dive deep into how more competition may stimulate innovation and productivity growth in Dutch retail.

duckworth
Download Presentation

Competition, Innovation, and Productivity in Dutch Retail: A Comprehensive Analysis

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Dutch retail trade on the rise?Impact of competition on innovation and productivity Harold Creusen*, Björn Vroomen, Henry van der Wiel, Fred Kuypers CPB Netherlands Bureau of Economic Policy Analysis *e-mail: hpwac@cpb.nl

  2. Background • Competition may stimulate • lower prices and efficient production • innovation • Efficient production and innovation entail productivity growth • Many policy measures in 1990s focussed on more competition • New Competition Act in 1998 • Regulatory reform since 1996, also in retail trade

  3. Background • Labour productivity in Dutch retail • missed strong productivity growth of US • slightly lost its strong position in EU Labour productivity (per hours worked) relative to EU-average, 1979-2002

  4. Questions I. How are competition, innovation and productivity related? II. Did competition affect innovation in retail? III. Did competition and innovation contribute to productivity growth in retail? • Conclusion: more competition in Dutch retail may stimulate innovation and productivity growth

  5. I. Relations • Relation between three blocks: Competition Static efficiency InvertedU-curve? Productivity Productivity gap? Innovation Dynamic efficiency

  6. II. Innovation: model • Aghion et al.: • inverted U-relationship between competition and innovation • higher productivity gap between firms amplifies inverted U-relationship • Explanation of innovation: inn = (φ0 + φ1 RPM + φ2RPM 2 ) (1 + ψ1PG) +φ3ms with inn log innovation outlays (firm level) RPM competition indicator (5-digit industry level) PG productivity gap with leader (firm level) ms log market share (firm level)

  7. II. Innovation: data and method • Sources: • CIS-innovation surveys, Statistics Netherlands (1996,1998 and 2000) • annual surveys of ‘Production Statistics’, Statistics Netherlands (1993-2002) • Method: • innovation outlays left sensored: no innovation in 75% of firms • innovation estimated by TOBIT I-method

  8. II. Innovation: results

  9. II. Innovation: results

  10. II. Innovation: results • No inverted U-relation between competition and innovation • Estimation based on linear relation: inn = φ0 + φ1RPM+φ3ms with inn log innovation (firm level) RPM competition indicator (5-digit industry level)

  11. II. Innovation: results

  12. III. Productivity growth: model • Split TFP-growth (Solow decomposition) in contributions of competition and innovation • Explanation of productivity growth: Δp = Φ0+ Φ1 RPM + Φ2INN-1+ Φ3 (Δk - Δl) + Φ4 Δl ───────┬──────── TFP-growth with Δp productivity growth (firm level) (Δk - Δl) capital intensity (firm level) Δl labour (economies of scale, firm level)

  13. III. Productivity growth: data and method • Source: annual surveys of ‘Production Statistics’, Statistics Netherlands (1993-2002) • Method: simple OLS

  14. III. Productivity growth: results

  15. Conclusions • No inverted U-relationship but positive relation between competition and innovation • Both competition and innovation have a positive impact on productivity growth • So more competition in Dutch retail may stimulate productivity growth • on the short term by reductions in X-inefficiency • on the long term by innovation

  16. Issues for future research • Functional form of relation between competition and innovation ? • Feed back of (dispersion in) productivity levels on competition ?

More Related