Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/205175
Authors: 
Ciriani, Stephane
Jeanjean, Francois
Year of Publication: 
2019
Series/Report no.: 
30th European Conference of the International Telecommunications Society (ITS): "Towards a Connected and Automated Society", Helsinki, Finland, 16th-19th June, 2019
Abstract: 
This paper addresses the empirical relationship between the level of competition and the rate of productivity growth across thirty sectors of the French production system during the period 1978- 2015. It shows that there exists an optimal level of competition for each sector that is defined by the mark-up that maximizes the growth rate of labor productivity. The information technologies Sectors have the highest mark-ups for maximizing productivity growth. The persistence of nonoptimal mark-ups in French sectors is associated with a 0.4% loss in aggregate average annual labor productivity growth during the period (1.86%). Hence, long-term productivity growth could have reached 2.25% if mark-ups had been at their optimal level. There is a strong significant positive correlation between the optimal mark-up and the rate of Hicks-neutral technical progress in each sector. This finding implies that sectors with high technical progress, as information technologies sectors, require higher mark-ups to maximize their rate of labor productivity growth. Overall, the aggregate economy would benefit from a decrease in the gap between nonoptimal and optimal mark-ups, as such an alignment would foster productivity growth.
Subjects: 
Technical progress
productivity growth
mark-up
JEL: 
O11
O31
O47
L16
Document Type: 
Conference Paper

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