Enforcing Competition and Firm Productivity : Evidence from 1,800 Peruvian Municipalities

This paper uses a unique data set that captures the elimination of subnational regulatory barriers to firm entry and competition across 1,800 municipalities and matches it with establishment census panel data to estimate the impact on establishment...

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Main Authors:	Schiffbauer, Marc, Sampi, James
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2019
Subjects:	COMPETITION POLICY TOTAL FACTOR PRODUCTIVITY PRODUCTIVITY STRUCTURAL REFORM SUBNATIONAL GOVERNANCE
Online Access:	http://documents.worldbank.org/curated/en/959721548166483225/Enforcing-Competition-and-Firm-Productivity-Evidence-from-1-800-Peruvian-Municipalities http://hdl.handle.net/10986/31182

id	okr-10986-31182
recordtype	oai_dc
spelling	okr-10986-311822021-08-15T12:14:15Z Enforcing Competition and Firm Productivity : Evidence from 1,800 Peruvian Municipalities Schiffbauer, Marc Sampi, James COMPETITION POLICY TOTAL FACTOR PRODUCTIVITY PRODUCTIVITY STRUCTURAL REFORM SUBNATIONAL GOVERNANCE This paper uses a unique data set that captures the elimination of subnational regulatory barriers to firm entry and competition across 1,800 municipalities and matches it with establishment census panel data to estimate the impact on establishment productivity and markups. The elimination of local barriers that were inconsistent with national legislation was the result of legal reforms that strengthened the mandate of Peru's competition authority. Legislative changes in 2013/14 empowered the competition authority to enforce the elimination of illegal, sector-specific subnational regulatory barriers to firm entry and competition, conditional on the existence of a precedence. The changes provide a unique quasi-experimental setting to identify the impact of enforcing competition within the controlled institutional environment of a single country. The paper finds that the elimination of subnational barriers to entry boosted the (revenue) productivity of establishments operating in reform municipalities and sectors relative to establishments in nonreform municipalities/sectors. But it did not raise the establishments' markups, which, if anything, declined, suggesting that physical productivity improved. The paper provides a wide range of evidence supporting a causal interpretation of this finding. The results suggest that strengthening the mandate of institutions enforcing competition is critical to raise productivity. 2019-01-31T23:18:47Z 2019-01-31T23:18:47Z 2019-01 Working Paper http://documents.worldbank.org/curated/en/959721548166483225/Enforcing-Competition-and-Firm-Productivity-Evidence-from-1-800-Peruvian-Municipalities http://hdl.handle.net/10986/31182 English Policy Research Working Paper;No. 8714 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Latin America & Caribbean Peru
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	COMPETITION POLICY TOTAL FACTOR PRODUCTIVITY PRODUCTIVITY STRUCTURAL REFORM SUBNATIONAL GOVERNANCE
spellingShingle	COMPETITION POLICY TOTAL FACTOR PRODUCTIVITY PRODUCTIVITY STRUCTURAL REFORM SUBNATIONAL GOVERNANCE Schiffbauer, Marc Sampi, James Enforcing Competition and Firm Productivity : Evidence from 1,800 Peruvian Municipalities
geographic_facet	Latin America & Caribbean Peru
relation	Policy Research Working Paper;No. 8714
description	This paper uses a unique data set that captures the elimination of subnational regulatory barriers to firm entry and competition across 1,800 municipalities and matches it with establishment census panel data to estimate the impact on establishment productivity and markups. The elimination of local barriers that were inconsistent with national legislation was the result of legal reforms that strengthened the mandate of Peru's competition authority. Legislative changes in 2013/14 empowered the competition authority to enforce the elimination of illegal, sector-specific subnational regulatory barriers to firm entry and competition, conditional on the existence of a precedence. The changes provide a unique quasi-experimental setting to identify the impact of enforcing competition within the controlled institutional environment of a single country. The paper finds that the elimination of subnational barriers to entry boosted the (revenue) productivity of establishments operating in reform municipalities and sectors relative to establishments in nonreform municipalities/sectors. But it did not raise the establishments' markups, which, if anything, declined, suggesting that physical productivity improved. The paper provides a wide range of evidence supporting a causal interpretation of this finding. The results suggest that strengthening the mandate of institutions enforcing competition is critical to raise productivity.
format	Working Paper
author	Schiffbauer, Marc Sampi, James
author_facet	Schiffbauer, Marc Sampi, James
author_sort	Schiffbauer, Marc
title	Enforcing Competition and Firm Productivity : Evidence from 1,800 Peruvian Municipalities
title_short	Enforcing Competition and Firm Productivity : Evidence from 1,800 Peruvian Municipalities
title_full	Enforcing Competition and Firm Productivity : Evidence from 1,800 Peruvian Municipalities
title_fullStr	Enforcing Competition and Firm Productivity : Evidence from 1,800 Peruvian Municipalities
title_full_unstemmed	Enforcing Competition and Firm Productivity : Evidence from 1,800 Peruvian Municipalities
title_sort	enforcing competition and firm productivity : evidence from 1,800 peruvian municipalities
publisher	World Bank, Washington, DC
publishDate	2019
url	http://documents.worldbank.org/curated/en/959721548166483225/Enforcing-Competition-and-Firm-Productivity-Evidence-from-1-800-Peruvian-Municipalities http://hdl.handle.net/10986/31182
_version_	1764473762208546816

Enforcing Competition and Firm Productivity : Evidence from 1,800 Peruvian Municipalities

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