Dutch retail trade on the rise? Relation between competition, innovation and productivity

This study analyses the productivity performance of the Dutch retail trade in more detail, and focuses on competition and innovation as two main drivers of productivity growth.

More precisely, it takes the mutual relationship between competition, innovation and productivity explicitly into account. Between 1993 and 2002 changes in competition varied substantially within the retail trade. However, on average competition slightly declined. Furthermore, only a few firms in the Dutch retail trade innovate. Regression analysis reveals that both competition and innovation enhance productivity growth directly. Further, fiercer competition induces more innovation, and consequently also raises productivity indirectly via innovation.