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Competition

Barriers to exit in competition

 

 4 December 2019  Paris  

Most of the focus in relation to barriers has been on barriers to entry and their effects on competition. However, for competition to be effective there must also be firm exit. Barriers to exit, like barriers to entry, decrease the market discipline mechanisms of the competitive process to relocate resources from one market or firm to another according to changing conditions. This can lead to less efficient firms staying in the market. As a result, resources (both financial and human capital) are ‘trapped’ longer in existing firms instead of being relocated to their most efficient use. This can make it difficult for more efficient firms to expand and could crowd-out the growth of more innovative firms. Therefore barriers to exit can have an adverse effect on the level of competition, hinder innovation and change, be an important driver of productivity slowdown, and have an adverse impact on economic growth.

In December 2019, the OECD held a roundtable to discuss what barriers to exit are, how they affect allocative efficiency, and what their impact on competition is. It also discussed how authorities consider barriers to exit in their enforcement and advocacy work and explored cases where barriers to exit were an important consideration to the case.

All related documentation will become available on this page.

» See full list of best practice roundtables on competition

 

INVITED SPEAKERS

Jocelyn MARTEL Bio   

Professor, Finance Department, and Co-Director, Chair ESSEC - AMUNDI Chair on Asset & Risk Management

Matthew JOHNSON Bio   
Partner, Oxera 

Müge Adalet MCGOWAN  Bio 
Senior Economist, Economics Department, OECD

Mary E. DEILY Bio 

Professor of Economics, Lehigh University 

 

DOCUMENTS

» OECD Background note • Note de réflexion de l'OCDE 

Belgium

Colombia

Italy

Mexico

Russian Federation

Spain

Turkey

Ukraine

BIAC

Summaries of contributions

VIDEOS 

Jocely Martel on bankruptcy laws as a barrier to exit

Mary B. Deily talks about barriers to exit in the US steel industry

Matthew Johnson on barriers to exit in enforcement

Read the OECD Background note

Watch more OECD videos on competition

See the full list of roundtables 

PRESENTATIONS

 

RELATED BEST PRACTICE ROUNDTABLES

Crisis Cartels 2011 

Exit Strategies 2010

Failing Firm Defense 1995

Competitive Neutrality: Maintaining a Level Playing Field between Public and Private Business 2012 

10 years on from the Financial Crisis: Co-operation between Competition Agencies and Regulators in the Financial Sector 2017 

SEE ALSO

Competition enforcement practices

OECD best practice roundtables on competition

More OECD work on competition

 

Related Documents