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Competition and productivity

Explore the correlation between competition and productivity using micro and macro indicators in Dutch manufacturing from 1996-2005. Discover how various indicators impact productivity change over time, with a focus on Profit Elasticity, Herfindahl Index, and more.

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Competition and productivity

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  1. Competition and productivity Michael Polder, Erik Veldhuizen, Dirk van den Bergen and Eugène van der Pijll International Statistical Conference Investment in the Future 2 Prague, Czech Republic 14-15 September, 2009 Micro and macro indicators of competition: comparison and relation with productivity change

  2. Introduction Application of Dutch growth accounts Combining micro and macro data Competition and productivity

  3. Multi-factor productivity KLEMS-Y model (consolidated) Index MFP = Exogenous interest rate Labour income self-employed

  4. Competition indicators Herfindahl index C4 indicator Price cost margin Labour income ratio Profit elasticity Import quote Export quote Concentration indicators Profitability indicators International competition

  5. Data and methodology Dutch manufacturing (12 industries) Final year data covering period 1996-2005 Macro and aggregated micro data Correlations between indicators Simple linear regressions (OLS) Contemporaneous and lagged

  6. Correlations between indicators Similarity of micro and macro indicators

  7. Correlations between indicators

  8. Correlations between indicators Similarity of micro and macro indicators Different dimensions of competition Differences between industries

  9. Differences between industries

  10. Differences between industries

  11. Relationships with productivity ExpectedResultResult t+1 Micro data: Profit elasticity + - (n.s.) + (n.s.) C4 - + + (n.s.) Herfindahl - + + (n.s) Labour income + - + Price cost margin - + - Export quote + + (n.s.) + (n.s) Macro data: Labour income + - + Price cost margin - + - Export quote + - (n.s.) + (n.s.) Import quote + - (n.s.) + (n.s.)

  12. Relationships with productivity ExpectedResultResult t+1 Micro data: Profit elasticity + - (n.s.) + (n.s.) C4 - + + (n.s.) Herfindahl - + + (n.s) Labour income + - + Price cost margin - + - Export quote + + (n.s.) + (n.s) Macro data: Labour income + - + Price cost margin - + - Export quote + - (n.s.) + (n.s.) Import quote + - (n.s.) + (n.s.)

  13. Relationships with productivity ExpectedResultResult t+1 Micro data: Profit elasticity + - (n.s.) + (n.s.) C4 - + + (n.s.) Herfindahl - + + (n.s) Labour income + - + Price cost margin - + - Export quote + + (n.s.) + (n.s) Macro data: Labour income + - + Price cost margin - + - Export quote + - (n.s.) + (n.s.) Import quote + - (n.s.) + (n.s.)

  14. Conclusions Competition is first negatively and after one year positively related to productivity Consistency micro and macro indicators Different indicators for different purposes

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