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Competition and the relative productivity of large and small firms

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Abstract:

Using a comprehensive dataset on the incidence of price-fixing across British manufacturing industries in the 1950s, I compare collusive and competitive industries and find evidence of a negative relationship between collusion and the labour productivity of larger firms relative to smaller firms. In particular, collusion is associated with a reduction or even a reversal of the productivity gap between larger and smaller firms. This result is robust to controlling for the potential endogeneity of collusion.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036840903508379

Affiliations: Department of Economics,University of Essex, Wivenhoe ParkColchester CO4 3SQ, UK

Publication date: September 1, 2011

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