Distributional Macroeconomic Effects of the European Union Competition Policy: A General Equilibrium Analysis

Abstract

No AccessJun 2017Distributional Macroeconomic Effects of the European Union Competition Policy: A General Equilibrium AnalysisAuthors/Editors: Adriaan Dierx, Fabienne Ilzkovitz, Beatrice Pataracchia, Marco Ratto, Anna Thum-Thysen, Janos VargaAdriaan DierxSearch for more papers by this author, Fabienne IlzkovitzSearch for more papers by this author, Beatrice PataracchiaSearch for more papers by this author, Marco RattoSearch for more papers by this author, Anna Thum-ThysenSearch for more papers by this author, Janos VargaSearch for more papers by this authorhttps://doi.org/10.1596/978-1-4648-0945-3_ch6AboutView ChaptersFull TextPDF (0.2 MB) ToolsAdd to favoritesDownload CitationsTrack Citations ShareFacebookTwitterLinked In Abstract: Demonstrates that competition policy has a sizeable impact on gross domestic product (GDP) growth and important redistributive effect. Competition policy indicates the enforcement of competition policy legislation covering the prohibition of cartels and the control of mergers; the strength of the European Commission’s competition policy emerges from the number and importance of its interventions in these areas. Competition policy interventions, such as lowering prices and increasing the quality and variety of products, prove particularly beneficial for the poorest in the society. Competition policy interventions increase output and raise demand for the factors of productions (capital, labor); the combination of price decline and the higher wages associated with increased labor demand and higher labor productivity yields an increase in consumption. Pro-competition policies have important redistributive effects because, while they boost the demand for all types of workers, they significantly reduce profits destined for non-liquidity-constrained households. 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