Industry structure dynamics and productivity growth
Economic theory typically predicts that productivity should increase when a firm's market is expanding since the benefits of reducing costs are higher when spread across a larger market. On the other hand there is a strong line of research stressing the positive impact of increasing competition and claiming that productivity should jump when a firm's market is being squeezed by new competitors. This paper investigates the effects of industry structure dynamics on productivity growth on panel data from industries of ten European countries. The econometric results provide empirical support for positive impact of less fragmented market structures on productivity, however results also point out the important role which dynamics of firms turnover play in industry performance. (original abstrct)
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