Well functioning markets is a prerequisite for economic and productivity growth. Promotion of competitive markets takes a high priority in the Finnish industrial policy, too. Notwithstanding, information on actual functioning of markets is relatively limited.
This study aims to outline methodologies for measuring competition applicable for international benchmarking research. The sketched models are based on the methodology developed in the OECD growth study completed in 2005.
Competition is measured by the factors affecting competition and the indicators reflecting the outcome of competition. For the former regulation of product market and market for the factors of production is used. The degree of market regulation is negatively correlated with the growth of aggregate production, employment and multifactor productivity, which measure the outcome of competition.
The functioning of the Finnish product markets ranks well above the OECD average. Notable market reforms have been the removal of barriers for entrepreneurship improving the conditions for market entry. The stringent regulatory regime of labour markets is the biggest obstacle.
Suomen hyödykemarkkinoiden toimivuus on hyvää OECD-maiden keskitasoa. Merkittäviä markkina-reformeja ovat olleet yrittäjyyden hallinnollisten esteiden purkaminen, mikä on parantanut markkinoille tulon edellytyksiä. Suurimpana ongelmana on työmarkkinoiden voimakas sääntely.
