Product Market Regulation and Competitiveness: Toward a National Competition and Competitiveness Policy for Greece1

Abstract

This chapter examines the competitiveness of product markets in Greece. One of the main determinants of competitiveness is the quality of the set of rules and regulations that govern the operation of markets. These should promote competition, investment and entrepreneurship. Heavy and low-quality regulation is generally associated with greater inefficiency and poor economic outcomes. This chapter describes competitiveness in the Greek economy and its evolution over time using various internationally comparable indicators that cover many dimensions of competitiveness. It demonstrates that product markets in Greece are among the most heavily and misregulated markets of advanced countries, though the reforms that took place during 2011–2014 had a positive impact. The chapter investigates in greater depth the misregulation of product markets, identifying possible causes and illustrating through case studies. It makes the case for a National Competition and Competitiveness Policy plan to improve the regulatory institutions and reduce regulatory burden. Finally, it looks at the successes and failures of regulatory reform history in two important markets: energy and telecommunications.

The Impact of Maximum Markup Regulation on Prices

“…It also relates to empirical studies of markets with vertical relations . From a policy perspective, this study contributes to the literature on the effects of regulation on efficiency and economic performance see, for example, (Djankov et al [2014]; Scarpetta and Tressel []; Blanchard []; Katsoulacos et al []), and informs the debate on recent investigations by the competition authorities (European Competition Network []) into suspected vertical and horizontal agreements in the food market…”

The tale of the two Greeces: Some management practice lessons

“…This positive relationship has been shown to be robust to alternative proxies for competition, such as import penetration rates or Lerner indices of competition (see Bloom & Van Reenen, ). Unfortunately, the picture that emerges from various international indicators (World Economic Forum, World Bank, and OECD) regarding the state of competition in the Greek economy before the crisis is that there were high barriers to entry, heavy state control, and very restrictive product market regulation, all of which naturally lead to less competition in product markets (see Katsoulakos, Genakos, & Houpis, ). In recent years, since the beginning of the crisis, reforms and changes in the legislation seem to be reversing these negative facts, but the process of deregulation to reinvigorate the competition in the internal product markets still has a long way to go.…”

Structural reforms to boost inclusive growth in Greece

“…For example, truck licensing has historically been among the most restrictive in the OECD. From the mid-1970s no licenses had been issued, such that the only way to obtain a license was by buying it in the secondary market at high prices (Katsoulacos, et al, 2015). Despite strikes and strong resistance a deregulation process started in 2010.…”

“…Greece would also profit from strengthening the judicial process related to competition by creating specialised appeal courts and training judges. Currently decisions tend to be taken on a formalistic assessment rather than the impact on social welfare, which often leads to decisions that reduce consumer welfare (Katsoulacos et al, 2015). In this regard, including economists or judges with specific training in economics and competition in the bodies dealing with competition cases can be useful.…”