Competition Policy in Central Eastern Europe in the Light of EU Accession
Jens Hölscher
Journal of Common Market Studies,
No. 2,
2004
Abstract
This study reviews the progress made in EU accession candidates on competition policy. The analysis shows that institution-building and legislation are well under way and that anti-trust practice is not too lax. Due to the diversity among the accession countries under review, the study finds that the strictly rule-based frame work of the EU might not be the most favourable solution for some candidates: firstly, the small and open economies of most candidates make it particularly difficult to define the ‘relevant market’ in competition cases. Secondly, the traditionally intense vertical integration of production in accession states calls for a reassessment of ‘vertical restraints’. The policy implications of this study suggest that the EU competition task force should take a proactive, case-by-case approach vis-à-vis its new members.
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Profitability of chemical industry varies across East Germany
Hans-Ulrich Brautzsch, Udo Ludwig
Wirtschaft im Wandel,
No. 5,
2004
Abstract
The Article is concerned with the cost and revenue situation in the East German chemical industry since the early 90s. In 2001 the industry managed to undercut the unit labour costs faced by their West German counterparts. Nonetheless, on average, they have not yet reached profitability. A clearly more favourable picture can be observed in the case of the rubber and synthetic material industry. Still, their yield dispersion between small, middle and large sized firms is large and should be taken into account during the forthcoming labour negotiations and while reaching any kind of decision concerning their costs.
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Competition Policy in Central East Europe in light of EU Accession
Johannes Stephan
Journal of Common Market Studies,
2004
Abstract
This study reviews the progress made in EU accession candidates on competition policy. The analysis shows that institution-building and legislation are well under way and that anti-trust practice is not too lax. Due to the diversity among the accession countries under review, the study finds that the strictly rule-based frame work of the EU might not be the most favourable solution for some candidates: firstly, the small and open economies of most candidates make it particularly difficult to define the ‘relevant market’ in competition cases. Secondly, the traditionally intense vertical integration of production in accession states calls for a reassessment of ‘vertical restraints’. The policy implications of this study suggest that the EU competition task force should take a proactive, case-by-case approach vis-à-vis its new members.
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Softening Competition by Inducing Switching in Credit Markets
Jan Bouckaert, Hans Degryse
Journal of Industrial Economics,
No. 1,
2004
Abstract
We show that competing banks relax overall competition by inducing borrowers to switch lenders. We illustrate our findings in a two-period model with adverse selection where banks strategically commit to disclosing borrower information. By doing this, they invite rivals to poach their first-period market. Disclosure of borrower information increases the rival's second-period profits. This dampens competition for serving the first-period market.
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Profits of East German industrial companies are slowly catching up
Hans-Ulrich Brautzsch, Udo Ludwig
Wirtschaft im Wandel,
No. 3,
2004
Abstract
The article is concerned with the development of unit costs in eastern and western German manufacturing firms from the early 90’s onwards. By 2001 unit costs in the east had fallen almost to the corresponding western level, which in part is due to the suspension of the existing labour agreements in the second half of the 90’s. Nonetheless, the rate of return in the east remains smaller than in the west, which is mainly induced by the high costs of rebuilding the capital stock. It follows that unit labour costs can not be the sole basis for the wage bargaining process.
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The economic structure of the largest East German cities: economic differences increase
Cordula Winkler
Wirtschaft im Wandel,
No. 2,
2004
Abstract
Especially large cities come into appearance within the field of interregional competition, while trying to attract enterprises and mobile production factors. Against this background, the paper examines the economic stage of development of the largest East German cities. In addition to the actual situation we have a look at the development of cities since the middle of the 90ies. Relating to the actual economic situation, the findings show great economic differences between cities. Nevertheless, none of the large cities have taken on a leading position for all considered indicators. Instead of this each large city has its own specific strengths and weaknesses – compared with the other large cities as well as compared with East Germany on the whole. In addition, a comparison with the situation in 1995 shows, that the degree of differentiation between cities has increased. This development goes along with a strengthening of specific economic profiles, particularly in smaller large cities.
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“Law on loyalty to collectively agreed standards“ - no means for adjusting competitive conditions in construction industry
Andrea Besenthal
Wirtschaft im Wandel,
No. 2,
2004
Abstract
Due to the increasing competition from abroad which is able to offer services for lower prices because of lower wage standards the stress of competition intensifies in Germany. With regard to West Germany the East German companies - paying lower wages – represent an immediate business competition. The supporter of the Tariftreuegesetze (laws concerning the construction industry which restrict public contracts only to contractors who pay union wages) see the laws` advantage in eliminating the existing differences in competitive conditions, which emerge from differences on the wage level. The IWH study concludes that the named wage laws do not seem necessary from an economic point of view.
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Firm-Specific Determinants of Productivity Gaps between East and West German Industrial Branches
Johannes Stephan, Karin Szalai
IWH Discussion Papers,
No. 183,
2003
Abstract
Industrial productivity levels of formerly socialist economies in Central East Europe (including East Germany) are considerably lower than in the more mature Western economies. This research aims at assessing the reasons for lower productivities at the firm level: what are the firm-specific determinants of productivity gaps. To assess this, we have conducted an extensive field study and focussed on a selection of two important manufacturing industries, namely machinery manufacturers and furniture manufacturers, and on the construction industry. Using the data generated in field work, we test a set of determinant-candidates which were derived from theory and prior research in that topic. Our analysis uses the simplest version of the matched-pair approach, in which first hypothesis about relevant productivity level-determinants are tested. In a second step, positively tested hypothesis are further assessed in terms of whether they also constitute firm-specific determinants of the apparent gaps between the firms in our Eastern and such in our Western panels. Our results suggest that the quality of human capital plays an important role in all three industrial branches assessed. Amongst manufacturing firms, networking activities and the use of modern technologies for communication are important reasons for the lower levels of labour productivity in the East. The intensity of long-term strategic planning on behalf of the management turned out to be relevant only for machinery manufacturers. Product and process innovations unexpectedly exhibit an ambiguous picture, as did the extent of specialisation on a small number of products in the firms’ portfolio and the intensity of competition.
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Unit labor costs and competitiveness - a micro econometric analysis for East Germany
Harald Lehmann
IWH Discussion Papers,
No. 180,
2003
Abstract
The paper stresses the value of unit labour costs as an indicator of competitiveness. It is assumed that there are different advantages by using microeconomic data which additionally allow the use of panelregressive methods. The findings for East German enterprises in the manufacturing industry (1998 to 2000) are that unit labour cost are useful for explaining the profit rate. This indicates that East German firms are facing in-price competition which depends clearly of labour costs. But unit labour costs do not explain the success on supraregional markets which are marked by non-in-price competition.
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On the stability of the banking systems in the Czech Republic, Poland and Hungary
Werner Gnoth
Wirtschaft im Wandel,
No. 11,
2003
Abstract
The EU countries are interested in stable banking systems of candidate countries, because any kind of instability of the financial sector could have serious consequences to the financial and exchange rate system of the whole Community. In the article the state of stability of the banking systems is analyzed, based on several important indicators. At present the banking systems of candidate countries still look fairly stable: weak competition among the banks, a high inflation rate and a low intermediation rate in terms of total assets / GDP have enabled banks still to reach a sufficient net interest yield. So they have been able to stand a relatively high share of non- performing loans and also a relatively high amount of foreign exchange indebtedness. In order to ensure a problem-free integration of the banking systems of the candidate countries in the EU they must still meet several conditions. They need to widen and refine the supply of services and to lower the share of non-performing loans, mainly in the Czech Republic and Poland. The foreign exchange indebtedness of the banking and enterprises domains in Poland and Hungary needs to be restricted. Successful integration in EU competition requires in general increase in the banks own capital.
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