Seminar: Lisbeth la Cour, Delia Ionasco. Department of Economics, CBS.

Title: Firm Productivity: the Role of Competition and of the Initial Firm Efficiency. Evidence from the Czech Republic.

Abstract:

Theoretical research shows that the effect of competition on firm productivity depends on the initial level of efficiency. Our empirical analysis on a panel data of Czech companies, years 1993-2005, confirms that both domestic and foreign competition have an effect on productivity in companies close to the technology frontier but not in backward companies. Nevertheless, the effect of trade liberalization on firm productivity is seriously understated in the absence of a control for domestic competition. Moreover, the fact that the initial firm efficiency affects the impact of trade liberalization is not confirmed when domestic competition is not taken into account.