The paper gives an overview of the interrelation between corporate governance, product market competition and performance across main "models" of corporate governance in OECD countries. The paper argues that managerial incentives, disciplining and corporate finance are not the fundamental distinguishing features of different financial systems. Instead, differences in ownership and control emerge as important influences on the formulation, implementation and adaptation of corporate strategy. Ownership and control structures are interrelated with competition in product markets: concentration of ownership may be required to establish relations between stakeholders and may impede product market competition.
George Symeonidis
This paper surveys the empirical literature on the links between innovation, market structure and firms size. The review shows that there is little evidence in support of the Schumpeterian hypothesis that market power and large firms stimulate innovations. However, positive linkages between concentration/size and innovative activity can occur when certain conditions are met, including high sunk costs per individual project, economies of scale and scope in the production of innovation rents. Recent empirical work suggests that RGD intensity and market structure are jointly determined by technology, the characteristics of demand, the
institutional framework, strategic interaction and chance.
Joaquim Oliveira Martins, Stefano Scarpetta and Dirk Pilat
This paper presents estimates of mark-ups of prices over marginal costs for 36 manufacturing industries and 7 service sectors in 14 OECD countries. It applies a recently developed methodology, and finds that positive mark-ups are common in both manufacturing and services. The level of the estimated mark-ups can partly be related to competitive conditions by type of market structure. The paper also finds evidence of counter-cyclical behaviour of mark-ups, providing a possible explanation for the pro-cyclicality of employment and real wages.
This paper discusses the empirical evidence on cross-country productivity gaps and analyses the link between productivity and competition. It finds that inefficiency and low productivity levels are widespread in both manufacturing and services, and throughout the OECD area. The variation in productivity levels and growth rates appears related to the degree of competition facing industries. International competition is an important element in achieving high productivity levels, but domestic factors also play a role. High entry rates appear conducive to productivity, but high concentration is not. In service sectors, government-imposed regulations are often an important restriction on competition and productivity growth.
The main income transfers provided by governments to people of working age are addressed. First, reasons for spending differences over time and across countries in transfer programmes are examined. A general finding is that differences in eligibility and entitlement conditions are usually more important than underlying population and risk characteristics. Moreover, eligibility conditions, reflecting policy goals and programme administration, often appear to be more important than benefit levels in explaining spending patterns. The second part of the paper reflects on these results, giving a brief overview of policy reforms that might allow programme objectives to be reached more efficiently.
