We would like to thank Zvi Eckstein, Jonathan Haskel, Fabienne Ilkovitz, Steve Nickell, and John Van Reenen for helpful comments. The analysis was funded by the European Commission and the ESRC under grant RES-000-23-0901 and the Advanced Institute of Management Research (AIM). All errors and omissions remain the responsibility of the authors.
Product Market Reform and Innovation in the EU*
Article first published online: 12 APR 2010
© The editors of the Scandinavian Journal of Economics 2010
The Scandinavian Journal of Economics
Volume 112, Issue 2, pages 389–415, June 2010
How to Cite
Griffith, R., Harrison, R. and Simpson, H. (2010), Product Market Reform and Innovation in the EU. The Scandinavian Journal of Economics, 112: 389–415. doi: 10.1111/j.1467-9442.2010.01602.x
- Issue published online: 26 MAY 2010
- Article first published online: 12 APR 2010
- First version submitted December 2008;final version received September 2009.
- productivity growth
European Union countries have implemented widespread reforms to product markets 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. Our analysis exploits 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.