Service deregulation, competition and the performance of French and Italian firms

We use firm-level data for France and Italy to explore the impact of service regulation
reform implemented in the two countries on the mark-up and eventually on the performance of
firms between the second half of the 1990s and 2007. We find that the relation between entry
barriers and productivity is negative and is crucially intermediated through the firm’s mark up. If
both countries adopted OECD’s best practices in terms of entry barriers, their TFP level would
increase by 3% for Italy and 3.5% for France.