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Unleashing competition in EU business services
  • Henk LM Kox, CPB Netherlands Bureau for Economic Policy Analysis
This policy brief provides research results indicating that a lack of competitive selection contributes to the productivity stagnation in European business services. Competition between small firms and large firms in business services is found to be weak. Inefficiencies also persist within size classes, which indicates a lack of competitive pressure. Markets for business services appear to work best in countries with flexible regulation on employment change, and with low regulatory costs for firms that start-up or exit a business. Countries with more openness to foreign competition perform better in terms of competitive selection and productivity. Policy simulations show that many countries can do better than they do now—but the potential gains from policy reform are largest in the Mediterranean EU countries and Austria. A strengthening of the Single Market for Services will contribute to more competitive selection and better productivity performance in European business services. Because of its large weight in the inputs of other industries, the business services industry should be a key industry in the Europe-2020 strategy of the European Commission.
  • market selection; scale economies; market contestability; regulation; EU; productivity
Publication Date
September 24, 2012
Citation Information
Henk LM Kox. "Unleashing competition in EU business services" (2012)
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